A provision in a bond indenture that in the event of default allows the trustee or the holders of 25% of the principal amount of the outstanding issue to declare all of the principal and interest immediately. Calling for an acceleration is likely to cause the borrower to cure the default or seek bankruptcy protection.
Main Entry: acceleration clause Function: noun : a clause (as in a loan agreement) that accelerates the date of payment in full under specified circumstances (as default by the debtor)
