Letter of Awareness
A letter of awareness (sometimes known as a letter of comfort) is a formal letter written by a parent company to a creditor, informing them that they are aware of a new loan or past debt issued to one of their subsidiaries.
This is not considered a legal commitment or guarantee that the subsidiary company will repay the loan, or that the parent company will pay it for them, but is simply a way to appease or comfort the lender that the right decision was made, to help the deal along, or to prevent harsh treatment by the lender for an existing debt.
Letters of awareness are often vaguely written so as not to be used by the lender to try and enforce the debt on to the parent company.
Starting to Write
Note the name of the subsidiary and the amount they borrowed or are borrowing from the lender.
State that as the parent company, you are aware of the loan and that the arrangement is beneficial to both parties involved.
Do not admit any wrong doing, culpability, or intent to secure the subsidiary’s loan.
Letter of Awareness Sample 1 test
I am writing to inform you that I’m aware of the recent $400,000 loan Maynard Investors made to DeFranco Pizza. Our firm Gyrocroft is the parent company of DeFranco and we are delighted to hear the good news. We believe you’ve made a sound decision.
This capital will greatly support the expansion aims of the Pizza franchise and will be beneficial to all those involved.
Kind Regards,
Mr. P. Duffy
Managing Director
Gyrocroft
Letter of Awareness Sample 2
Patriots Finance,
It is my understanding that our subsidiary company Gamers R Us is seeking finance from your Angel Investor consortium. We believe this is great news.
Gamers R Us has been increasing market share on the East Coast for the past 5 years and anyone choosing to invest will be in a great position as they expand to other parts of the country.
We look forward to the deal going through.
Yours Faithfully,
Lets Play International