Event of default
Draft definition. Technical and editorial approval pending.
A specified occurrence that gives the provider stated rights, which may include stopping further funding, changing the cash application order, or accelerating amounts owed. Events range from payment failures to covenant breaches, performance triggers and cross-defaults. Which rights arise, and whether any cure period applies, depends entirely on how the documents are drafted.
In practice
In a fictional facility, an 800,000 USD borrowing base shortfall becomes an event of default if uncured after the contractual cure period. Whether you may cure with equity, additional collateral or repayment, and over what period, is a negotiated point rather than a fixed convention.
Read this in context: Negotiating Terms.