Restrictive covenants

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Restrictive covenants

Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Restrictive Covenant

A bond covenant that forbids the issuer from taking certain actions. For example, a restrictive covenant may prevent an issuer from issuing more debt until the bond matures. More commonly, a restrictive covenant limits the dividends an issuer may pay to shareholders so as to reduce the risk to the bond. It contrasts with a positive covenant, which requires the issuer to take certain enumerated actions. It is also called a negative covenant.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
To be enforceable, restrictive covenants must be reasonable in terms of duration, geographical area and activities they seek to prevent.
The trial court concluded the liquidated damages provision was an invalid penalty and instructed a jury to determine whether the terms of the restrictive covenant were reasonable, whether Christian had breached the agreement and, if so, what damages flowed from this breach.
A survey of business and trade journals over the last three years turned up hundreds of articles either recounting stories of employee competition or offering instruction in the use of restrictive covenants.
In 1984 The Nation revealed that Ronald Reagan and his first wife, Jane Wyman, bought land in Beverly Hills that carried restrictive covenants and that they later extended those restrictions to adjoining parcels, two of which they bought [see Richard Ryan and Elsa Dixler, "Reagan's Racial Covenant,' October 13, 1984].
(11) The history of Florida's restrictive covenants, ostensibly rebutting Grant and Steele's contention, discloses what has been a steady march toward imbalance--toward tipping the scales heavily in the employer's favor.
Her argument boiled down to the fact that her restrictive covenant, which prevented her from joining a competitor, was too widely worded to be enforceable.
3d at 785 (stating that employers may not use restrictive covenants to eliminate fair competition).
The affidavit would simply make clear that the present owner condemns racially restrictive covenants.
When Mercado continued on at Lonza Biologics as a UG2 employee, C&W a Massachusetts corporation sued her in federal court in Boston to enforce the restrictive covenant. Saylor granted a preliminary injunction against Mercado, finding C&W showed its non-service restrictive covenant protected a legitimate business interest cognizable under Massachusetts law.
All of sellers' shares in Icelandair Group will be subject to restrictive covenants for six months and half of the shares will be subject to restrictive covenants to further six months.
Project finance-like features include restrictive covenants; ring-fenced operations; restriction on additional debt; extensive security package, and inter-creditor agreement.
I have recently observed a trend in employment litigation: employers attempting to enforce covenants not to compete or solicit clients ("restrictive covenants") that are contained in employee manuals, as opposed to discrete contracts.

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