Definition
A negative pledge on intellectual property (IP) is a contractual provision that prohibits the borrower from using its IP as collateral for other loans.
Related Services
Legal services, intellectual property management, and contract law assist businesses in drafting and enforcing negative pledge clauses.
Problem and Application
A negative pledge can limit a company�s ability to secure additional funding but offers protection for existing creditors.
Conclusion
Negative pledges help protect creditors but may restrict a business�s financial flexibility, so they should be considered carefully in financing agreements.
