Amendments, waivers and releases

When the borrower's financial position starts to deteriorate, a common first step is to approach the lender seeking to revisit the terms of the finance documents. Depending on the circumstances, this may be an amendment to reschedule the debt to make the repayment dates in the facility agreement achievable or it may be a request for lender's consent to dispose of assets secured by the lender's security to raise cash required to help the business through a difficult period of trading.

The need for a one-off waiver and consent may also arise where the borrower's circumstances have changed in a more temporary way. For example, it might have had a temporary downturn in business, causing it to breach a financial covenant. In these circumstances, the borrower will not need a permanent change to the facility agreement but rather just a short-term waiver from the lenders to avoid it being in default. Sometimes, the borrower does not need a waiver from the lenders but, rather, consent from them for something that it wishes to do which is prohibited by a negative covenant in the facility agreement.