In one sentence
The guaranty behind a non-recourse loan that springs personal liability for specified bad acts like fraud, waste, misapplication of funds, or unauthorized transfers.
The longer version
Often called bad-boy guaranties, carve-outs split into loss items, where the guarantor covers the lender's actual loss from the act, and full-recourse triggers, where the whole loan becomes personally guaranteed, classically bankruptcy filings and prohibited transfers.
Carve-out language is heavily negotiated because case law has enforced springing recourse literally. Sponsors read these clauses the way lenders read financial covenants.
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