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What is a Negative Pledge?

What is a Negative Pledge?

How do creditors know they will get what they're owed when a company defaults? How do they know that other equal creditors won't receive more than them? A negative pledge creates creditor equality at a given level of a company’s capital structure by ensuring that no other creditor is better off than any other in liquidation. In this video James explains the concept of a negative pledge in more detail. 

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