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Judgment & ambiguity · Decisions under uncertainty

A borrower is one day from a quarterly reporting deadline and their draft numbers put the debt-service-coverage ratio a hair under the covenant — but the figures are unaudited and the CFO says a large receivable just cleared that isn’t booked yet. Do you call it a breach, and what do you do today?

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Today I don’t declare a formal breach on unaudited figures, but I also don’t take the CFO’s word and move on — I treat it as amber and act on both fronts.

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