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Structuring Financial Covenants: Purposes, Types, Definitions, and Uses in Loan Documents

Maximizing Borrower Protection and Lender Remedies

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, March 17, 2022

Recorded event now available

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This CLE course will provide borrowers' and lenders' counsel with a review of the use of EBITDA, leverage ratios, and other metrics in loan documentation and uses of financial covenants. The panel will outline critical issues relating to structuring financial covenants, related definitions, and use in commercial loans.


Negotiating the definition of EBITDA and related financial covenants is a matter of intense client focus. Sophisticated clients rely on counsel to provide knowledgeable support on EBITDA and relevant covenants.

Strategically crafted financial covenants and related definitions can provide the borrower with the flexibility to operate its business and the lender with adequate protection and remedies.

Uncertainty or lack of clarity regarding drafting financial covenants and related definitions may result in costly disputes. Carefully structured credit agreement provisions can minimize disagreements among the parties.

Listen as our authoritative panel of finance practitioners discusses trends in the use of EBITDA in the loan documentation and financial covenants and events of default provisions in commercial loans.



  1. Purpose of financial covenants
  2. Types of financial covenants
  3. Financial definitions: net income, EBITDA, fixed charges
  4. Covenant-lite transactions
  5. Distinctions between cash flow and asset-backed loans
  6. Mandatory prepayments: excess cash flow
  7. Equity cure rights


The panel will review these and other key issues:

  • Why have financial covenants?
  • What are the critical conceptual drivers that fuel the negotiation of financial covenants?
  • How does understanding these key concepts help negotiate the optimal outcome for clients?


Campana, Kristen
Kristen V. Campana

Morgan, Lewis & Bockius

Ms. Campana represents a wide variety of direct and alternative lenders, particularly those involving private sources...  |  Read More

Surbeck, David
David A. Surbeck

Holland & Knight

Mr. Surbeck represents lenders (including regional, national and international banks, debt funds and other lending...  |  Read More

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