Equity Cure (Banking & Finance Glossary)

Summary

The right to or the method used to prevent or repair a breach in a Financial Covenant by allowing shareholders of the Borrower to infuse cash to the Borrower. Typically, the Financial Covenants can be retested on a pro forma basis after the infusion of cash. There are usually restrictions on when and how often an Equity Cure can be exercised as Lenders do not want a short term fix to mask the Borrower’s potential long term financial problems.