acceleration clause

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Acceleration clause

A contract stating that the unpaid balance becomes due and payable if specific actions transpire, such as failure to make interests payments on time.

Acceleration Clause

A clause in a contract, especially a loan or bond, allowing a creditor to call the debt if certain, stated events occur. For example, if a borrower defaults on two or more payments, an acceleration clause may allow a lender to force the borrower to repay the entire amount of the loan immediately. Failure to repay could absolve the lender of all obligations in the contract, including the requirement to refund any money the borrower had previously paid, and render it effectively null and void.

acceleration clause

A provision in a bond indenture that in the event of default allows the trustee or the holders of 25% of the principal amount of the outstanding issue to declare all of the principal and interest immediately. Calling for an acceleration is likely to cause the borrower to cure the default or seek bankruptcy protection.

acceleration clause

The clause in a promissory note or lease that allows immediate demand,upon default,for all sums due over the entire term.

Acceleration Clause

A contractual provision that gives the lender the right to demand repayment of the entire loan balance in the event that the borrower violates one or more clauses in the note.

Such clauses may include sale of the property, failure to make timely payments, or provision of false information.

I have never seen a note that did not have such a clause. Borrowers need not concern themselves with it except where the lender has discretion to exercise it without conditions. This would be referred to as a “demand feature,” and it would be flagged on the Truth in Lending Disclosure Statement. If that statement shows “This loan has a Demand Feature…,” the note should be read with care. See Demand Clause.

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Note that some lockbox arrangements do not go into effect unless the lender exercises a subjective acceleration clause (a springing lockbox).

Asset-based financing basics: what CPAs need to know about using asset-based lending and factoring as alternatives to traditional bank financing

79-3 are inconsistent in their treatment of subjective acceleration clauses in debt agreements.

Mortgage-backed securities

In any event, notwithstanding the absence of an acceleration clause, a landlord may be able to achieve some of the procedural benefits of an acceleration clause if the landlord could seek, in its complaint, not only the damages due to the date of the complaint, but also a declaration, in advance, as to tenant's continued liability for future liquidated damages under [paragraph]18.

What damages can an owner collect when a tenant vacates prior to lease expiration?

the "Company") determined that borrowings outstanding under its revolving credit facility as of January 31, 2003 and July 31, 2004, previously reported as long term-debt should be classified as current maturities of long-term debt in accordance with the provisions set forth in Emerging Issues Task Force (EITF) 95-22, "Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement.

MFRI, Inc. Reports Record Earnings for the 3rd Quarter

95-22, "Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement," and certain provisions in the credit agreement, determined that it is required by EITF 95- 22 to reclassify the loan facility from long-term to short-term debt, although the facility does not mature until January 31, 2007.

Hanover Direct Announces the Filing of a Form 12b-25 Notification of Late Filing with the Securities and Exchange Commission and the Postponement of its Fiscal Year 2003 Operating Conference Call

NYSE: ICL), announced today that its lenders have temporarily waived all covenant violations under the company's banking line of credit and senior note and that its banking lenders have temporarily waived the effects of a subjective acceleration clause in the company's line of credit agreement.

INTELLICALL ANNOUNCES ITS LENDERS HAVE TEMPORARILY WAIVED ALL COVENANT VIOLATIONS