while most financial covenants are only tested twice a year they...

while most financial covenants are only tested twice a year they are in force "at all times", both on an historical and also a look forward basis. As an Event of Default also includes a Potential Event of Default, ie a breach of a future testing of financial covenants they are in breach now so the banks if they wanted could elect to wind up company now. However, that rarely ever happens as the banks are far better off by arranging a sale, equity raise or just suckling up all available cash until they are certain of getting their money back.