Debt Compliance Services has prepared the following checklist. It is designed to identify potential covenant issues so that they can be appropriately managed before year-end and after year-end.

1. Covenant Ratios: Perform a preliminary calculation of the company’s various financial ratio covenants using the latest 4Q P&L and balance sheet forecasts. If the ratios are close, run different scenarios, including alternative balance sheet adjustments, to test the leeway that the company has.
2. Notices: Review your debt compliance calendar for all scheduled year-end notices. Critically, review your any event that have occurred in the 4Q that require immediate notice, such as asset sales, litigation, changes in material contracts, etc.  
3. Annual Reporting: Often, debt agreements have special year-end reports that are not part of the regular quarterly compliance. Be sure to check all agreements, as the junior debt may well have only annual reporting requirements. Review the reports, determine whether any will have adverse consequences, and confirm with the report preparers the process for delivering the reports on time.
4. Permitted Baskets: Review all baskets and forecast the year-end utilization. If limits are close, institute appropriate measures. 
5. Checklist: Review your covenant checklist to determine if any there are any other potential issues.
6. Prior Quarter Issues: Review all issues that were identified in the prior quarters of the year to determine whether such issues remain unresolved or have re-emerged.
7. Amendments: If there have been any amendments that have not been reflected in the covenant checklist to make sure that you have reviewed them for all the issues noted above.

Debit Compliance Services stress “this checklist is not meant to take the place of your regular full-scale debt compliance review in January.