Distress & Turnarounds

Waivers and Amendments

Know exactly what to ask a lender for when you break a covenant — and what it will cost you to ask for the wrong one.

  • Advanced
  • 8 min total
  • 12 chapters

What decision this helps you make: Whether to buy a one-quarter waiver, negotiate a reset amendment, or use a cure right — and how much of your operating freedom to hand over to get it.

What this topic is

A waiver is a lender excusing a breach that already happened. An amendment changes the loan agreement going forward. They are separate documents with separate prices, and choosing between them is the first real decision a borrower makes after a covenant miss.

Why it matters

A covenant breach makes the entire loan legally callable. What happens next is negotiated, not automatic — and the borrower who arrives early with a forecast and a specific ask keeps far more control, and far more cash, than the one who waits to be found out.

Who should learn it

CFOs, owners, and advisers on the borrower side of a credit agreement, and anyone on the lending or investing side who needs to read what an amendment actually did.

What you will understand

  • Tell a waiver, an amendment, and a forbearance apart by what each fixes
  • Price an amendment: fee, margin step-up, and the operating restrictions
  • Work an equity cure and spot the drafting point that moves it by millions
  • Know which lenders must vote yes and which single lender can block you

Prerequisites

Common misconception

"We missed the covenant, but we are current on every payment, so the bank has no real remedy." A financial covenant breach is an event of default in its own right. Once it matures into one, the standard credit agreement lets the lender accelerate the entire balance, stop funding the revolver, apply default-rate interest, sweep the accounts it holds, and enforce against collateral. Being current on interest is not a defence; it is a reason the lender might prefer to negotiate. Those are different things.