Define: Keepwell Agreement

Business, Legal & Accounting Glossary

Definition: Keepwell Agreement



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Full Definition of Keepwell Agreement


A keepwell agreement is a contract between a parent company and one of its subsidiaries which guarantees that the parent company will provide all necessary financing to the subsidiary for a pre-determined period of time. The idea behind a keepwell agreement is to make the subsidiary company appear more creditworthy in the eyes of banks and other lenders. Without a keepwell agreement a small subsidiary might have trouble securing additional financing. Since the keepwell agreement acts as a financial guarantee, obligating the parent company to provide consistent funding, banks and other financial institutions feel more confident making loans with a keepwell agreement in place. Likewise, due to the financial obligation placed on the parent company by a keepwell agreement, the subsidiary company may enjoy a better credit rating than would be possible without a signed keepwell agreement.


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https://payrollheaven.com/define/keepwell-agreement/
Modern Language Association (MLA):
Keepwell Agreement. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 08, 2020 https://payrollheaven.com/define/keepwell-agreement/.
Chicago Manual of Style (CMS):
Keepwell Agreement. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/keepwell-agreement/ (accessed: April 08, 2020).
American Psychological Association (APA):
Keepwell Agreement. PayrollHeaven.com. Retrieved April 08, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/keepwell-agreement/

Definition Sources


Definitions for Keepwell Agreement are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020