Fig. 01 · Glossary
Covenant Breach
Also known as Covenant Default, Loan Covenant Breach
Definition
A covenant breach occurs when a borrower fails to satisfy a requirement in its debt documents, such as liquidity, EBITDA, leverage, reporting, or budget compliance. In a turnaround, covenant risk changes the decision cadence because lenders can gain approval, waiver, pricing, or enforcement leverage.
Covenant breach risk should be managed before the breach date. Waiting until the package is due usually gives the lender more leverage and management fewer options.
The practical tool is a weekly cash and covenant forecast tied to a lender communication plan.
Human Renaissance glossary · operator-grade definitions · Research methodology
