The status quo agreement was separate from the accession instrument formulated at about the same time by the Department of States, which was a legal document including a transfer of sovereignty to the extent defined in the instrument.  During the status quo period, a new agreement is negotiated, which generally changes the original loan repayment plan. This option is used as an alternative to bankruptcy or enforced execution if the borrower cannot repay the loan. The status quo agreement allows the lender to save some value from the loan. In the event of forced execution, the lender must receive nothing. By working with the borrower, the lender can improve its chances of repaying some of the outstanding debt. A status quo agreement between a lender and a borrower may also exist when the lender stops requiring a planned interest or capital payment for a loan to give the borrower time to restructure its debts. A status quo agreement can be reached between governments for better governance. According to K.M Munshi, appointed India`s general agent in Hyderabad, the Indians felt that the conclusion of a status quo agreement with Hyderabad meant that India had lost control of Hyderabad`s affairs. The Hyderabad State Congress opposed it because it was seen by the Indian government as a sign of weakness.  V. P. Menon stated that Nizam and his advisers viewed the agreement as a respite from which Indian troops would be withdrawn and the state could establish its position to maintain its independence.
 The agreement is particularly relevant insofar as the bidder would have access to the confidential financial information of the entity concerned. After receiving the commitment of the potential purchaser, the target entity has more time to set up additional defence facilities for the acquisition. In some situations, the target entity agrees to repurchase shares of the target with a premium in return for the potential purchaser. A status quo agreement is an agreement between the company and its creditors that hinders the execution of creditors (see previous: status quo agreement). At the international level, it may be an agreement between countries to maintain the current situation, in which a responsibility owed to one to the other is suspended for a specified period of time. The debtor company will be a party, with operating subsidiaries holding valuable assets or at risk of violating a formal procedure or its financial obligations, as well as, as a general rule, the ultimate parent company. Other parties will be creditors and other stakeholders essential to the success of the business, for example.B. key customers, suppliers (if the entity is a critical customer, useful concessions can be obtained) and the pension manager/regulator (if there is a significant pension deficit). Whoever has a place at the negotiating table (and who should be involved in the impasse) depends on where the value should be broken (see practical note: where value breaks and bargaining force). Companies with complex layers of debt have several classes of creditors with conflicting motivations.
Understanding their positions is the key. For example, initial lenders of record loans that acquire debt at face value may have a history of supporting the business, while secondary debt sellers who buy less than one percent often seek a loan from a business under pressure from an aggressive bidder or activist investor, a status quo agreement is useful to weaken the unsolicited approach. The agreement gives the target entity greater control over the deal process by requiring the bidder or investor to buy or sell the company`s shares or launch proxy contests.