Limitation on Subsidiary Debt
Limitation on Subsidiary Debt - a covenant that limits or restricts any additional debt that may be incurred by subsidiaries included in the Credit Group. Debt limitations look to protect the current lenders by maintaining the Credit Group’s degree of leverage. The purpose of the Limitation on Subsidiary Debt Covenant is to limit the amount of additional debt that may be incurred by subsidiaries included in the Credit Group unless cash flow is sufficient to service all debt.
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