Negative lien Clause Samples
A negative lien is a contractual provision that restricts a borrower from creating any security interest or encumbrance over specified assets without the lender's consent. In practice, this means the borrower cannot pledge, mortgage, or otherwise use those assets as collateral for other debts while the agreement is in effect. This clause is commonly used in loan agreements to protect the lender's interests by ensuring that the borrower's assets remain unencumbered, thereby reducing the risk that other creditors could claim priority over those assets in the event of default.
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Negative lien. Except the charges and encumbrances already created on the fixed assets by the Borrower for availing financial assistance, as disclosed in writing as of date by the Borrower, the Borrower shall not without prior written consent of the Bank:-
a) create or permit to arise or subsist any mortgage, charge, pledge, lien encumbrance or security interest whatsoever over all or any of its undertaking, assets present or future (including un-called capital) of the Borrower as security for any obligations now or hereafter existing in favour of any person, however, subject to following exceptions:-
i) The Borrower may create security interests on its assets to secure the issue of its secured long term bonds with a maturity in excess of one year.
ii) The Borrower may create security interest on its assets to secure any rupee loan, the repayment of which is due within 12 months or less from the date of the said loan including working capital financing and
iii) The Borrower may create security interest on its assets to secure any foreign currency borrowings from multilateral and bilateral agencies like IBRD, JBIC, KFW etc.
b) Sell, transfer or otherwise dispose of, by one or more transactions or series of transactions (whether related or not) the whole or any substantial part of its fixed assets, the book value of which is 25% or more of the book value as shown in the latest audited financial statements of the Borrower.
Negative lien. The Borrower shall not without prior written consent of the Bank: -
a) create or permit to arise or subsist any mortgage, charge, pledge, lien encumbrance or security interest whatsoever over all or any of the 15 RE assets for which loan is availed by the Borrower as security for any obligations now or hereafter existing in favour of any person, however, subject to following exception: -
i) The Borrower may create security interests on its assets to secure the issue of its secured long-term bonds with a maturity in excess of one year. The Borrower may create pari-passu security interests on aforesaid assets in favour of other lenders (if required).
b) Sell, transfer, or otherwise dispose of, by one or more transactions or series of transactions (whether related or not) the whole or any substantial part of its fixed assets with respect to above project.
Negative lien. The Borrower shall not without prior written consent of the Bank: -
a) create or permit to arise or subsist any mortgage, charge, pledge, lien encumbrance or security interest whatsoever over all or any of its assets present or future with respect to the 450 MW Wind Solar Hybrid project won under Tranche-IV RfS floated by Solar Energy Corporation of India Limited (SECI) for which loan is availed by the Borrower as security for any obligations now or hereafter existing in favour of any person, however, subject to following exception: - The Borrower may create pari-passu security interests on aforesaid assets in favour of other lenders (if required).
b) Sell, transfer, or otherwise dispose of, by one or more transactions or series of transactions (whether related or not) the whole or any substantial part of its fixed assets with respect to above project.
Negative lien. [ICICI BANK LETTERHEAD] ANNEXURE III NOTICE OF DRAWDOWN/REQUEST FOR DISBURSEMENT The Branch Manager ICICI Banking Corporation Limited Mumbai Branch Dear Sir, Re: Multicurrency Corporate Credit (MCC) facility ______________ Request for disbursement Please refer to the letter of sanction dated _______________. We request you to disburse/release an amount of _______________. We give below the particulars against which the drawing is required.
Negative lien. The Company shall not create or permit to subsist any Security Interest over the Secured Assets.
Negative lien. The Borrower hereby declares and undertakes that all the company’s / LLP’s / firm’s movable and immovable assets shall not be sold or disposed off or mortgaged, charged or hypothecated or encumbered in any way without the prior consent of the Bank in writing, so long as the company / LLP / firm is indebted or liable to the Bank in any manner whatsoever.
Negative lien. The Borrower shall not without prior written consent of the Bank: -
a) create or permit to arise or subsist any mortgage, charge, pledge, lien encumbrance or security interest whatsoever over all or any of its assets present or future with respect to the 325 MW Shajapur project for which loan is availed by the Borrower as security for any obligations now or hereafter existing in favour of any person, however, subject to following exception: - The Borrower may create pari-passu security interests on aforesaid assets in favour of other lenders (if required).
b) Sell, transfer, or otherwise dispose of, by one or more transactions or series of transactions (whether related or not) the whole or any substantial part of its fixed assets with respect to above project.