Keepwell Agreement

DEFINITION of 'Keepwell Agreement'

A contract between a parent company and its subsidiary to maintain solvency and financial backing throughout the term set in the agreement.

BREAKING DOWN 'Keepwell Agreement'

This is a method by which subsidiary companies may increase the creditworthiness of debt instruments and corporate borrowing.

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RELATED FAQS
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    Understand the primary differences between a subsidiary company and a wholly owned subsidiary, and their relationship to ... Read Answer >>
  2. Are domestic and foreign subsidiaries included on a company's financial statements?

    A subsidiary is a company that is controlled by another 'parent' company. The subsidiary acts and operates like its own entity ... Read Answer >>
  3. What is the difference between a subsidiary and a sister company?

    Discover the differences between subsidiary companies and sister companies, and understand how both are related to parent ... Read Answer >>
  4. Are solvency ratios more concerned with the short-term or the long-term?

    Learn what solvency is, how to use ratios to determine a company's solvency, and why solvency ratios are concerned with the ... Read Answer >>
  5. How do wholly owned subsidiaries operate in the European Union?

    Find out how wholly owned subsidiaries and their parent companies are treated in the European Union, specifically regarding ... Read Answer >>
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    Learn how the potential tax implications of a spinoff can affect both parent and subsidiary companies and how taxes may be ... Read Answer >>
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