Restricted Payments (2024)

FAQs

What are restricted payments in a credit agreement? ›

In its simplest formulation, a restricted payments covenant in a loan agreement limits the borrower's (or its parent company's) ability to make payments in the nature of dividends, distributions, equity redemptions and repurchases from its equity holders.

Restricted Payment Conditions means, at the time of determination with respect to any specified Restricted Payment, that (a) no Default or Event of Default then exists or would arise as a result of making of such Restricted Payment, (b) after giving effect to such Restricted Payment, the Total Outstandings are not ...

Capacity to make Restricted Payments is derived from the build-up basket (usually half of consolidated net income plus a few other components) and the Permitted Payments baskets. When an issuer uses some of the Permitted Payments baskets, this will reduce capacity in the build-up basket, while for others it won't.

A term defined in bank loan agreements and other debt agreements that typically includes payments of dividends, repurchases, and redemptions of equity interests and distributions to equity holders.

Limitation on Restricted Payments - a covenant that is designed to prevent cash and assets from being transferred outside the Credit Group, subject to certain exceptions, unless the Credit Group's positive performance or improved financial condition justifies its ability to make such payments.

What are payment restrictions? Payment Restrictions mean the limitation of payment which can't be exceeded by both parties of the deal or the set of regulations that can't be violated.

Restricted transactions are transactions in which a person accepts credit, funds, instruments or other proceeds from another person in connection with unlawful Internet gambling.

A restrictive condition is a condition in a contract that forbids a party from doing a certain thing. It is a type of negative condition. For example, a tenant may be restricted from subletting leased property. If the tenant violates this condition, they may be in breach of the contract and face consequences.

Restricted Amounts means, at any time of determination, cash, Cash Equivalents and current accounts receivable that are not available for general corporate purposes.

Specified Restricted Payment Test means, at any time of determination, with respect to any Restricted Payment or Redemption (a) no Default or Event of Default has occurred and is continuing or would immediately result from such Restricted Payment or Redemption and (b) at such time after giving effect to such Restricted ...

What does restricted capacity mean? ›

Restricted Capacity means a capacity in which the Executive performs or would perform services and/or discharge duties which are the same or similar to any duties and/or services provided by the Executive to the Group during his employment with the Company.

Lenders determine your credit limit by examining your credit history and financial information. You can typically only spend up to your credit limit until you repay some or all of your balance. Spending more than your credit limit could result in penalties.

Restricted Debt Payment means any payment in cash in respect of the principal of (including any paid-in-kind principal) any Restricted Debt, including, without limitation, any payment at stated maturity, the principal portion of any amortization payment, any purchase, redemption, retirement, acquisition, cancellation ...

Rule 3 of Dividend Rules prescribes the conditions to be complied with for declaring dividend out of reserves. A pertinent question here is – whether a company can declare dividend out of 100% of the amount that has been transferred to General Reserve.

Therefore, cash dividends reduce both the Retained Earnings and Cash account balances. There are three prerequisites to paying a cash dividend: a decision by the board of directors, sufficient cash, and sufficient retained earnings.

An R–U–C agreement is one where the creditor can ensure that the money provided is used exclusively for the agreed transaction. Thus, if under a three party D–C–S agreement for a loan to purchase a car the finance company provides the money directly to the garage, this will be an R–U–C agreement.

Credit limit: If a purchase would put your credit card balance over the available limit, the account can be restricted to prevent further use.

a loan for which, as a result of an existing arrangement between a supplier and a firm , the customer's application to the firm is submitted through the supplier and the terms of the loan require that it be paid to the supplier for goods or services supplied to the customer , not including loans secured by a charge ...