when a subsidiary finds itself in a cash crunch and has trouble accessing financing to continue its operations it can sign a keepwell agreement with its parent company for a set period of time 
keepwell agreements not only help the subsidiary and its parent company but they also boost confidence in shareholders and bondholders that the subsidiary will be able to meet its financial obligations and run smoothly suppliers that provide raw materials are also more likely to look at a troubled subsidiary more favorably if it has a keepwell agreement keepwell agreements give confidence not just to lenders but also to a subsidiary s shareholders bondholders and suppliers 