Market Trends 2021/22: Equity Cure Rights

Summary

This practice note provides an overview of equity cure rights contained in credit agreements and discusses current market trends in publicly filed credit agreements from the second half of 2021 and first half of 2022. Equity cure rights permit an investment of cash in the borrower—typically made by a holding company, sponsor, or other shareholder—to allow the borrower to comply with financial maintenance covenants in the credit agreement, thus preventing or repairing a breach of that covenant.