A loan may require periodic compliance with lender covenants. A covenant violation may give a lender the right to demand immediate payment of the loan. You should classify a debt obligation as non-current, unless there has been a covenant violation that gives the lender the right to call the debt, and it is probable that the entity will not be able to comply with the covenant within the next 12 months. If both of these criteria have occurred, then classify the debt as a current liability.
You should not classify a debt as a current liability if the lender has waived the right to demand repayment for more than one year, the entity has cured the covenant violation, or it is probable that the entity will cure the violation within the specified grace period.