Workout Agreement

A workout agreement describes the agreements reached between lenders and borrowers in the context of distressed debt or debt in default. Workouts invariably involve amending loan and bond documentation, as well as covenant waivers or forbearance (i.e. where lenders agree not to pursue legal rights under credit agreements). The end-game is that borrowers are able to continue with debt service in restructured format, can cure covenant breaches and remedy default triggers.