DSCR Failure Sample Clauses
A DSCR Failure clause defines the consequences and procedures that apply when the Debt Service Coverage Ratio (DSCR) falls below a specified threshold. Typically, this clause is found in loan agreements and triggers certain actions, such as increased lender oversight, restrictions on distributions to equity holders, or requirements for the borrower to take corrective measures if the DSCR drops below the agreed level. Its core practical function is to protect lenders by ensuring that the borrower maintains sufficient cash flow to service debt, thereby mitigating the risk of default.
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DSCR Failure. In the event that the Cash Manager determines, in accordance with Section 3.06(c) hereof, that a DSCR Failure for the related Payment Date will occur, it shall provide Written Notice thereof (not later than two Business Days prior to such Payment Date) to the Issuer, the Guarantor, the Administrative Agent, the Trustees, the Pass Through Trustee, the Policy Provider and the Rating Agencies. Following the occurrence of a DSCR Failure, all proceeds on deposit in the Collections Account shall be applied in accordance with Section 3.08(b) hereof.