Document background
The Negative Pledge Agreement is a fundamental tool in commercial lending and financing transactions, particularly utilized in unsecured lending arrangements under Danish law. This document is typically employed when a lender requires protection against the borrower granting security interests to other creditors, without taking actual security themselves. The agreement helps maintain the lender's relative position in the borrower's capital structure by preventing the borrower from pledging assets to other creditors, thereby potentially subordinating the lender's position. Used extensively in corporate financing, syndicated lending, and bond issuances, the document outlines specific prohibitions, permitted exceptions, monitoring requirements, and enforcement mechanisms, all structured to comply with Danish legal requirements and market practice.
