Negative Pledge
A negative pledge is a covenant restricting liens or security interests that could place new secured creditors ahead of existing lenders or bondholders.
Contractual protections and creditor rights that govern liens, equal ranking, mutual obligations, and exposure reduction.
Priority clauses can protect a creditor’s position without granting collateral. A Negative Pledge restricts specified liens, while a Pari Passu Clause addresses equal rank within a defined class. Neither should be treated as an automatic security interest.
Set-Off is different: it applies one eligible obligation against a mutual counter-obligation. Its value depends on legal mutuality, enforceability, timing, account ownership, competing rights, and insolvency or consumer-law limits.
Review the actual obligors, assets, permitted-lien baskets, comparison class, remedies, and governing law. Clause labels are useful only after their definitions and exceptions are mapped. These pages are educational and are not legal, bankruptcy, banking, lending, or personalized financial advice.
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A negative pledge is a covenant restricting liens or security interests that could place new secured creditors ahead of existing lenders or bondholders.
A pari passu clause states that specified obligations rank equally within a defined class, without necessarily requiring equal timing, security, or payment.
Set-off applies one enforceable obligation against a mutual counter-obligation, reducing the amount payable while remaining subject to contract, law, and insolvency limits.