UK Accounting Glossary
A Negative pledge is a provision in a contract which prohibits a party to the contract from creating any security interests over certain property specified in the provision.
This is a covenant in a loan agreement in which a borrower promises that no secured borrowings are to be made during the lifetime of the loan or that they will ensure that the loan is secured equally and rate-ably with any new borrowings as explicitly defined.
A type of loan or loan condition in which the borrower agrees with the lender not to allow any other lender or creditor to rank ahead for payment in the event of a liquidation. Such a loan is unsecured (ie. not backed by a charge over specific assets).
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This glossary post was last updated: 27th January 2019.