Default

Glossary

Banking

Default

A corporate default occurs when a company fails to meet its financial obligations, either because it is unable to do so because it lacks the financial resources to do so, or because it chooses not to for any number of reasons, including commercial or contract disputes. Some defaults can be cured relatively quickly and simply; others can lead to a forced restructuring, or to court-appointed bankruptcy. Default can be declared in the event of missed payments to investors on secured or unsecured interest-bearing debt obligations, of missed commercial mortgage payments, missed payments to suppliers, or missed equipment or auto lease payments. Breaches of debt covenants can also result in technical default and can lead to debt acceleration or other sanctions.

logo-animationlogo-animationlogo-animation

Related terms