Finance: A specific exception to a negative covenant or other provision in a loan agreement. For example, in the covenant which limits the sale of assets by the borrower, a carve-out would permit the sale of obsolete or worn out property disposed of by the borrower in the ordinary course of business.

Securities and Capital Markets: A specific exception to a negative covenant in an indenture.

Bankruptcy: An agreement by a senior secured creditor to set aside a portion of its recovery for the benefit of a junior creditor, without regard to the absolute priority rule. Carve-outs usually arise in the context of DIP financing, where the DIP lender agrees to set aside a portion of the funding or a portion of its collateral to pay the fees of the professionals working for the debtor and the creditors' committee.