backstop facility

Definition

A backup financing arrangement that provides liquidity if primary funding sources fail, like a financial safety net nobody hopes to use. It's insurance that you're paying for just in case everything goes wrong.

Example Usage

The company secured a backstop facility from a hedge fund at predatory terms, betting they'd never need to actually draw on it.

Origin

Banking and corporate finance term from credit facility structures

Fun Fact

During the 2008 crisis, many backstop facilities were activated simultaneously, revealing that the 'backup' plan involved everyone needing backup at once.

Source: Corporate banking and structured finance terminology

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buyout

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asset

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Yield

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payable

In accounting, the money your company owes but hasn't paid yet—basically corporate IOUs sitting on the balance sheet like financial landmines. Also known as "accounts payable," these are the bills that make CFOs wake up in cold sweats. The bigger this number gets, the more creative the excuses to vendors become.

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