An Inter Creditor Agreement (Or Intercreditor Deed) Is A Contract Between Two More Creditors

Typically, a primary lender dictates the duration of the agreement. Therefore, if the junior lender does not negotiate properly, this may be at a disadvantage. Francis Wilks-Jones has a team with legal expertise in bidding advice and bid agreements. We are experts on all matters relating to subordination agreements, including the development and negotiation of the subordination agreement. Another provision of the inter-creditor agreement could be a stalemate. Subsequently, the junior lender is prevented from taking action against the borrower to enforce its debt. As a general rule, the restriction is to take action (require payment, take legal action, etc.) for a specified period of time. In addition, the status quo period extends until the execution process of the primary lender is opened. Sometimes the period extends to the full repayment of the priority debt. Different types of transactions have different typical structures and types of debt, and there are also significant differences within each type of transaction. This practice note explains the provisions that most inter-secretary agreements often find. Company X may be in a contract with the government agency Y for the development of an urban planning plan for military veterans. The cost of the project is estimated at approximately $125 million, of which the company funds only $25 million.

As a result, the company is seeking an advance from the government and another third-party funder. To convince both the government authority and financiers to finance the project, the entity uses a high-quality asset as collateral. Before the agreement is signed, the junior lender must also specify the definition of “senior debt” and “junior retirement.” In addition, it is customary for a lead lender to process the terms of the agreement without the agreement of the junior lender. This is what the junior lender should keep in mind. Indicates the purpose of an intercreditor agreement and whether an intercrecreditor agreement is used instead of a priority or submission act. The ideal for a bank is that it can impose without restriction, while other creditors cannot take enforcement action without your consent.