What is a negative pledge clause?
A common limitation on the debtor faculties is not to perform new debts after receiving the loan incorporating the negative pledge clause. Beside that, another common clause is to prevent the debtor to sell an important part of its assets, so that its disposal faculties will be focused only on selling the assets which are subject to its ordinary business.
Despite what has been said, these clauses cannot prevent the debtor to take on new debt. Another important point is that a negative pledge clause can allow the debtor to assume more debt in case it is agreed with a lower range. Thus, the first debtor requesting the negative pledge ensures repayment in preference to the subsequent.