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10 videos • 59 minutes
How do creditors know they will get what they're owed when a company defaults? How do they know that other equal creditors won't receive more than them? A negative pledge creates creditor equality at a given level of a company’s capital structure by ensuring that no other creditor is better off than any other in liquidation. In this video James explains the concept of a negative pledge in more detail.
Tim Skeet • 01:36
A borrower needs to protect themselves from liabilities that are out of their control, for example natural catastrophes. In this video Tim explains the idea of force majeure, which is a common clause in borrowing documentation, releasing borrowers from liability for natural catastrophes.
Tim Skeet • 01:02
It is key that investors and lenders understand where they stand in the repayment queue should a company default. In this video Tim discusses the pari passu clause, a standard feature in debt agreements ensuring creditors are aware of when they will be repaid, in relation to other lenders.
Tim Skeet • 04:22
As the name suggests, junior or subordinated debt holders contractually stand below all forms of senior debt. In this short video, Tim explains the risks associated with investing in subordinated debt and the reasons why borrowers issue this type of debt.
Tim Skeet • 01:49
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