comfort letter

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Definition of comfort letter in English English dictionary: (Finans) A Comfort Letter is a document prepared by an accounting firm assuring the financial soundness or backing of a company. The comfort letter can be issued by a CPA declaring no indication of false or misleading information in the financial statements and that the company's prospectus follows GAAP. This is sometimes used in connection with an initial public offering
letter of comfort: A type of letter popular in the 1980s addressed to a lender giving some type of reassurance about the position of a borrower (or prospective borrower). Such a letter is written by someone substantial such as a parent company or major shareholder, but is not a guarantee and usually not even a legally enforceable undertaking (making it in practice almost worthless, yet lenders at various times have found such letters comforting)
Dear Sir, We confirm that we are aware of all the facilities which are presently made available by your company to Duke Securities Ltd (hereinafter referred to as the Company) and that you have our assurance that we will use our best endeavours to not permit the company to enter into liquidation (whether voluntary or compulsory) or to enter into any arrangement with its creditors without its liability to your company being completely discharged. — example letter of compfort (from Duke's parent company) quoted in Trevor Sykes, The Bold Riders, second edition, 1996, ISBN 1-86448-184-6, page 16.

comfort letter

Hyphenation

Com·fort let·ter

kʌmfırt letır

/ˈkəmfərt ˈletər/ /ˈkʌmfɜrt ˈlɛtɜr/

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