# Keep Well > Keep Well means a commitment to maintain an entity's agreed-upon financial condition **Term:** Keep Well **Last updated:** 2026-07-29 ## Definition ## What Keep Well Means in a Contract A Keep Well provision, sometimes called a Keep Well Agreement or comfort letter, is a contractual commitment by one party, typically a parent company, majority shareholder, or affiliated entity, to support another party's financial health for the duration of the arrangement. The supported party is usually a subsidiary, joint venture, or special purpose vehicle that needs to demonstrate creditworthiness to lenders, bondholders, or trading counterparties. Rather than guaranteeing repayment of a specific debt, the Keep Well party agrees to maintain the other entity's solvency, net worth, working capital, or liquidity at a specified minimum level. This mechanism sits between an informal comfort letter and a formal guarantee. It signals serious intent to stand behind an affiliate without necessarily creating the same direct, unconditional payment obligation that a guarantee imposes. Because of this middle ground, Keep Well arrangements are closely scrutinized by credit rating agencies, auditors, and legal counsel when assessing the true risk profile of a transaction. ## How Keep Well Is Defined or Measured The substance of a Keep Well obligation depends entirely on the specific metrics and triggers written into the agreement. Common measures include minimum net worth thresholds, maintenance of a positive working capital position, specified liquidity ratios, or an obligation to inject additional capital if certain financial covenants are breached. Some clauses require periodic financial reporting to confirm compliance, while others are triggered only upon an event of default or a ratings downgrade. Because these thresholds are contractually defined rather than set by any external regulator, the parties must agree on precise accounting standards, testing dates, and remedy mechanisms. A Keep Well that merely states an intention to support financial condition, without measurable benchmarks, offers far weaker protection than one tied to concrete figures and testing periods. - Minimum net worth or tangible net worth thresholds - Working capital or current ratio requirements - Capital injection obligations upon breach - Notice and cure periods before remedies apply ## Where Keep Well Appears in Agreements Keep Well provisions frequently appear in corporate finance transactions, project finance structures, and intercompany arrangements where a parent wants to support a subsidiary without formally guaranteeing its debt. They are common in structured finance, aircraft and shipping finance, and certain public sector or infrastructure projects where a sponsoring entity backs a project company. These clauses can be found within a broader