Negative statement

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The negative declaration or negative clause is an assurance of the debtor contained in unsecured loan agreements or in loan terms in the form of a clause that he will not provide any loan collateral to future creditors or at the same time offer the creditors benefiting from the declaration of equivalent collateral. It is one of the standards of the non-financial covenants .


Creditors of blank loans are keen to be served and treated equally by the debtor . This interest derives from the principle Par conditio creditorum , which demands equal treatment of creditors.

The credit institutions grant unsecured loans with regard to the financial situation of a borrower and trust in their existence during the loan term . In order not to jeopardize the borrower's portfolio of assets during the loan term, the negative declaration contains prohibitions on disposal, encumbrance and obligations insofar as these transactions are entered into for the purpose of securing the loan (general prohibition of collateralization). The negative declaration may prohibit the debtor from having alienable rights ( Section 137 sentence 2 BGB ), but the borrower does not lose his (real) power of disposal ( Section 137 sentence 1 BGB). This means that through the negative declaration, the debtor may be issued a legally stipulated prohibition to sell or only encumber his assets. However, if he does not adhere to them, the sales or encumbrances made by him towards third parties are legally effective.

With the negative clause, a borrower or bond debtor undertakes to the unsecured creditor not to grant security interests for any other liability without at the same time and in the same rank itself providing comparable collateral for the liabilities benefiting from the clause. The negative clause is therefore intended to prevent collateral that discriminates against creditors. In terms of content , the negative declaration comes very close to the pari passu clause . The difference between the Pari-Passu clause and the negative clause is that the Pari-Passu clause represents an assurance of equality, while the negative clause contains an equality obligation .


Negative clauses can be found in almost all syndicated loan agreements as a standard of the LMA , but they have already made their way into the medium-sized sector. They are also used in real estate financing . They are also regularly used in loan terms for unsecured bonds. In contrast to other clauses in loan agreements or loan terms, the content of the clause has a very low level of standardization. Depending on the scope of the obligation, the following types can be distinguished in terms of the legal system.

  • Standard negative declaration :

The borrower merely undertakes not to provide collateral to other creditors during the term of the loan without the consent of a bank, without simultaneously offering the bank collateral of the same value. It is very undifferentiated in this global formulation, so that more precise variants are preferable.

  • Extended negative declaration :

In addition, the borrower can undertake not to encumber his assets in whole or in part without the consent of the bank. In order to prevent immoral gagging, sales or encumbrances on current assets in the course of normal business operations must be expressly permitted.

includes beyond the above scope the obligation of the borrower, under certain conditions (e.g. non-compliance with balance sheet ratios , deterioration of the equity ratio below a contractually fixed minimum ratio ; covenants as a condition precedent ) to provide a security that is described as specifically as possible. This security must achieve a degree of determinability that, if the condition occurs, triggers a specific legal claim by the bank to the loan security described.

In the conversion law, the negative declaration assures that an action against the effectiveness of the conversion resolution has not been brought or not in time or such action has been legally rejected or withdrawn ( Section 16 (2) sentence 1 UmwG ; Section 125 sentence 1, Section 198 (3) in conjunction with V. m. Section 16 (2) sentence 1 UmwG) The status up to the submission of the negative declaration remains unaffected in all three variants; they therefore secure an existing status quo and future development.

Disposal, obligation and encumbrance prohibitions

With such prohibitions, the contracting parties want to cover every type of collateral provision for credit security purposes. As orders ( english "disposals" ) are the primary collateral assignment of objects and the assignment considered. This also includes sales in the context of spurious factoring , the discounting of receivables and sale-and-lease-back transactions , provided that the transaction represents a credit grant and the sale has a credit security function. The encumbrance ( English "encumbrance" ) refers to the order of real rights such as mortgages , in rem rights with fuse character and liens . The subject of the prohibition of obligations ( English "contingencies" ) are primarily sureties , guarantees and other assumptions of liability by the borrower for the purpose of securing the loan. The extent of collateral prohibition is in a credit agreement by Anglo-American model materially from the system of exceptions ( English "Permitted encumbrances" determined). This catalog of exceptions contains in particular the collateral, legal liens, retention of title in normal business operations and other burdens that secure a certain maximum amount ( English "threshold amount" ) of loan liabilities when the loan agreement was concluded.

The negative declaration will also have to include the borrower's subsidiaries on a regular basis, whereby the borrower undertakes to enforce compliance with the prohibitions on disposal by issuing appropriate instructions within the group. From the point of view of the creditors, it is more favorable if these subsidiaries submit the negative declaration themselves.


When including a negative clause, special features must be taken into account. Disposals or encumbrances on current assets in the course of normal business operations must remain expressly permitted within the extended negative declaration, because otherwise the borrower is deprived of all commercial freedom of action and there is a risk of immoral gagging. The permit only extends to the current assets, so that sales or encumbrances to the fixed assets (including participations) may not be made without the consent of the obligee.

If a bank is already the creditor of a mortgage, the negative declaration must expressly exclude the land already encumbered in favor of the bank. After § 1136 BGB namely those agreements are null and void through which the landowner against a mortgagee committed to the land neither to sell nor to burden further.

The terms and conditions can be seen in para. 13 General Terms and Conditions banks / no. 22 No. 1 AGB-Sparkassen a claim for additional collateral, according to which the creation or strengthening of loan collateral becomes necessary due to a change in the customer's risk situation. This right of additional collateral is a type of positive declaration that should apply to all customer relationships for which no positive credit agreements have been agreed. According to the prevailing opinion, this claim resulting from the General Terms and Conditions is not directed from the outset to a specific security, but generally to the provision of bank-like security, so that the debtor has a free choice among various assets. This is what is known as incongruent cover. Such incongruent loan collateral can be challenged under insolvency law and must be surrendered by the credit institution concerned if the borrower is insolvent. This means that the claim for additional collateral and the collateral ordered are only legally correct as long as the customer does not become insolvent.

The subsequent collateral from a negative declaration, which is not based on a specific loan security, can be challenged in the borrower's crisis according to Section 131 InsO , because the provision / strengthening of collateral for existing loans does not constitute congruent cover. Exceptions are the specifically designated loan collateral, which is determined so precisely by means of a negative or positive clause that it can be distinguished from other components of the debtor's assets.

For the current assets, the exception of the “ordinary course of business” is used. This is an indefinite legal term . Disposals or encumbrances in the course of normal business operations are expressly permitted in order to avoid gagging. What is considered unusual or unusual in the context of business activity depends on the one hand on the industry and business purpose ( commercial register ) of the company concerned, on the other hand this also includes sales of products at conditions that are not customary in the market. Waste of stock is therefore not part of normal business operations. Unless otherwise mentioned, deliveries subject to retention of title are part of normal business operations in certain industries. However, when the retention of title is first agreed by the supplier, the phase of an unusual business operation begins.


The negative declaration must be as complete as possible so that its effectiveness is not missed. In addition, it must reach a level of commitment that has the character of an obligation. For this it is necessary that on the one hand it precisely describes the prohibitions of disposal, encumbrance and obligations and on the other hand it also precisely defines the necessary exceptions. Strictly speaking, the standard negative declaration also covers supplier credits secured by retention of title, because retention of title is "security for third party creditors". However, this usual supplier security should not be forbidden by the negative declaration, because it is part of normal business operations. Everyone involved is aware of this, so that an undifferentiated declaration made in this form cannot have any judicial significance.

The sale of fixed assets at market prices cannot be prevented by a standard negative declaration. The company borrowing on the basis of a negative declaration may, for example, sell and rent back a property or building as part of a "sale-and-lease-back". In doing so, it has economically reduced the amount of liability without formally violating the negative declaration. Revaluations of already registered land charges by the same creditor are still possible despite the existing negative declaration , because there is no new land registry encumbrance on the property. If existing land charges that are not entered in the land register in favor of the beneficiary of the negative declaration, however, are to be assigned to other creditors, the negative declaration applies, because assignments would violate the prohibition of disposal under the negative declaration.

Legal consequences

Despite the negative declaration, the debtor does not lose his right of disposal over his unencumbered assets ( § 137 sentence 1 BGB). Therefore, collateral orders made contrary to the agreement are unrestrictedly effective in terms of property law in favor of other creditors .

If the borrower does not comply with the negative declaration and he orders collateral for other creditors without informing the creditor as agreed or at the same time offering him collateral of the same value, he has violated the loan agreement and breached an ancillary contractual obligation. A bank can then decide whether it can continue to maintain the credit relationship or whether it is unreasonable to maintain the credit relationship due to the seriousness of the breach of contract. If this is unreasonable, the bank can withdraw from the contract ( Section 325 BGB). Failure to comply with the negative declaration also triggers termination options that may result from the default clause of a credit agreement. The exemplary list of extraordinary reasons for termination for an important reason also includes culpable breach of contractual obligations by the borrower.


  • Jörg Mucke, Negative Pledge Clauses as an instrument for securing credit, content requirements of German law , in: WM 2006, pp. 1804–1810.

See also

Individual evidence

  1. ^ Norbert Horn, The Law of International Bonds , p. 304
  2. Mauricio Hartwig-Jacob, The contractual relationships and the rights of investors in international bond issues , 2001, p. 514
  3. Tobias Nicoleyczik, Creditor Protection Between Law and Contract , 2007, p. 110
  4. BGH, judgment of December 3, 1998, Az.IX ZR 313/97, full text = WM 1999, 12.
  5. Tony Rhodes / Mark Campbell / Clare Dawson, Syndicated Lending: Practice and Documentation , 2004, p. 100
  6. Tobias Nicoleyczik, Creditor Protection Between Law and Contract , 2007, p. 111
  7. no. 26 para. 2 AGB-Sparkassen