'Ordinary Course Of Business' In Debt Agreements

Law360, New York (June 22, 2010, 9:56 AM EDT) -- Many credit agreements, indentures and other institutional debt agreements include the limiting phrase “in the ordinary course of business,” often in the context of exceptions from prohibitive (or “negative”) covenants in the agreement.

For example, a debt agreement may prohibit the borrower from granting a lien on any of its assets, with an exception for “liens arising in the ordinary course of business.”

Similarly, the agreement may stipulate that the borrower may not sell any of its assets, except for “sales in the ordinary course of...
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