Intercreditor issues

Intercreditor agreements

The aim of the intercreditor agreement is to deal with potential conflicts between the different classes of secured lender in a restructuring or enforcement.

The intercreditor agreement typically covers:

•
priority of different classes of lender (see Practice Notes: Priority between security interests and Contractual priority—varying the basic rules on priorities)
•
methods of enforcement (and identity of any Instructing Group) (see Practice Note: Senior/mezzanine creditor intercreditor issues—enforcement [Archived])
•
standstill provisions
•
provisions blocking payments to junior lenders and turnover provisions
•
the majorities required to amend or vary the finance documents (see Practice Note: Intercreditor payment priorities and requisite majorities)
•
release by the security trustee (see Practice Note: Intercreditor agreements—effective releases)
•
the ability to buy out dissenting parties
•
the waterfall of payments

The Loan Market Association (LMA) launched its standard intercreditor agreement

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