GLOSSARY

Intercreditor agreement definition

What does Intercreditor agreement mean?

Sets out the agreement between various lenders, ranking their debt and security.

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Intercreditor agreements—effective releases

BackgroundThe aim of the intercreditor agreement is to try and deal with potential conflicts which will inevitably arise between the different classes of secured lender on an restructuring.The intercreditor agreement will cover various issues (see Practice Note: Intercreditor agreements for R&I lawyers), of which one of the most important is the security trustee's ability to grant releases to enable assets to be sold 'free and clear' from any junior liabilities on the instructions of the majority senior lenders (generally 66⅔ % in connection with enforcement of the security).Many restructurings involve the enforcement of share pledge collateral where shares in the holding company (Holdco) are sold to a new company (Newco) controlled by senior creditors who are 'in the money' or to a third party purchaser (see Practice Notes: Where the value breaks and negotiating strength and Transfer to Newco). In order to do this, Holdco and the group need to be released from all claims which are 'out of the money' (generally junior claims), guarantees and security. This allows a clean break from the old structure and a transfer unburdened by old liabilities.The intercreditor agreement may permit the security trustee to release some or all of the following:•guarantees•security•principal debt claimsIt is often important to consider the tax position as releasing a borrower from

Intercreditor agreements for R&I lawyers

RationaleThe importance of intercreditor agreements has grown with the increased use of different layers of debt by a company or group of companies. The aim of the intercreditor agreement is to try and deal with potential conflicts which will inevitably arise between the different classes of secured lender on an restructuring.Intercreditor agreements are particularly important in Europe where there are a range of possible restructuring processes, compared to the US where the chapter 11 process automatically provides for creditor releases and is fairly well established and predictable for creditors (see US chapter 11—overview).Accordingly, an increasing reliance is being placed on the contractual position. An intercreditor agreement typically covers the following:•priority of different classes of lender as regards payment and security including third-party debt, intra-group debt and structural debt•methods of enforcement (and identity of any Instructing Group)•standstill provisions for junior lenders prohibiting any enforcement action (including demands, acceleration, or litigation) whilst senior liabilities remain outstanding (usually ranging from 90 to 179 days, depending on the nature of the default), which often determine the time-frame within which the senior lenders will aim to complete restructuring negotiations with the debtor company•provisions blocking payments to junior lenders during a standstill period (usually from the issue of a stop notice following a material event of default under the senior

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Closing Memorandum for a high-yield bond transaction

Closing Memorandum for a high-yield bond transaction This is a template closing memorandum for use in a high-yield bond transaction. It sets out steps to be taken during the course of a high-yield bond transaction. Additional documents or steps (such as escrow arrangements) may be required, depending on the specific transaction. This pro forma closing memorandum has been drafted on the basis of a high-yield bond issuance which is secured, has the benefit of guarantees from the issuer group, is rated and is listed on a stock exchange, and where the issuer is relying on Regulation S and Rule 144A of the US Securities Act 1933. You may come across a deal which does not use a closing memorandum. Rather, counsel only drafts the certificates typically appended to the closing memorandum. If this is the case, be sure that all certificates are drafted and that all necessary documents and steps are covered. The preference would be to put the full closing memorandum together for completeness. [ISSUER] €[●][Floating OR Fixed] Rate Senior [Secured] Notes due [●] _________________ CLOSING MEMORANDUM [Date] _________________ The following is a list of the names of certain parties mentioned and of certain terms used in this Closing Memorandum, together with the designations used herein: Auditors [●] Authentication Agent [●] Blue Sky Memorandum A final Blue Sky Memorandum, dated [●], from [Counsel to the Initial Purchasers] to the Initial Purchasers,

Project lawyers’ completion documents list—onshore wind farm and ground-mounted solar projects—template

Project lawyers’ completion documents list—onshore wind farm and ground-mounted solar projects—template PROJECT DETAILS PROJECT NAME: [insert name of project] CLIENT: [insert name of client] [Insert name of firm] PROJECT LEAD: [insert name of client/lead partner] PROJECT PARTIES PROJECT PARTY DETAILS Account Bank(s) [insert name of Account Bank] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Account Bank] Agent [insert name of] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Agent] Architect [insert name of Architect] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Architect] Arrangers [insert name of Arrangers] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Arrangers] Civil Design Consultant [insert name of Civil Design Consultant] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Civil Design Consultant] Construction Contractor [insert name of Construction Contractor] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Construction Contractor] Construction Contractor Parent Company [insert name of Construction Contractor Parent Company] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Construction Contractor Parent Company] [ Construction sub-contractors ] [[insert name of sub-contractor] (Company Registration No. [insert number]) whose registered office is at [insert registered office of sub-contractor]] [ Legal/Technical/Financial Due Diligence Provider ] [[insert name of Due Legal/Technical/Diligence Provider] (Company Registration No. [insert number]) whose registered office is at [insert registered

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Would a debt for equity swap be legally and commercially viable where: a) multiple debts are owed to multiple creditors by an OpCo; b) the shares to be issued are shares in TopCo where the TopCo is a UK listed plc? In addition, could TopCo hold shares in treasury to satisfy these debts?

Would a equity-swap'>debt for equity swap be legally and commercially viable where: a) multiple debts are owed to multiple creditors by an OpCo; b) the shares to be issued are shares in TopCo where the TopCo is a UK listed plc? In addition, could TopCo hold shares in treasury to satisfy these debts? A debt for equity swap (DES) is a popular restructuring method; financial creditors receive equity in the restructured vehicle in return for reducing or cancelling their debt claims against the company (and the rest of the group). For guidance on DES, see Practice Note: Debt for equity swaps. Can a DES be done for multiple creditors? A DES can be done undertaken for multiple creditors. The difficulties and indeed the complexities of executing a DES have been exacerbated by the increasingly complicated capital structures that have evolved in leveraged transactions since before the financial crisis. The constant layering of debt (there were some 12 layers of debt confronting those involved in the restructuring of Four Seasons Healthcare) has led to complex intercreditor arrangements that are entered into between a myriad of lenders to companies at the various layers of their capital structures. To regulate their rights and claims against group companies and their rights as against each other, the various capital providers will require other financial creditors such as senior lenders, second lien lenders, mezzanine lenders,

In the context of intra-group loans, is a subordination deed only required to subordinate loans from non-obligor lenders to obligor debtors? Is there any reason obligor to obligor intra-group loans require subordination?

In the context of intra-group loans, is a subordination deed only required to subordinate loans from non-obligor lenders to obligor debtors? Is there any reason obligor to obligor intra-group loans require subordination? The facilities agreement will often contain undertakings from the obligors that may provide sufficient protection against a potential competing debt claim from an obligor—this needs to be considered on a case by case basis. The guarantee wording in the loan market association standard form leveraged facilities agreement, for example, prevents an obligor from claiming or proving as a creditor in competition to a finance party. The document also obliges a creditor obligor to grant security over its rights as a creditor in favour of the finance parties. Therefore, it is not invariably be the case that a subordination deed is used in the context of loans between obligors. Non-obligor group creditors will not, however, typically be giving such undertakings in the facilities agreement and should therefore

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Winding-up order made despite the existence of earlier proceedings in Germany (Barings (UK) Ltd v Galapagos SA)

Restructuring & Insolvency analysis: The High Court has granted an application to wind up a company incorporated in Luxembourg in a decision which sheds light on the application of cross-border insolvency principles following the UK’s departure from the EU. Written by Phillip Patterson, barrister, Gatehouse Chambers.

Banking and Finance weekly highlights—23 June 2022

This week's edition of Banking and Finance weekly highlights includes: (1) the LMA updates its REF Security Agreements and user guides, (2) the publication of the annual report for 2022 on the implementation of the National Security and Investment Act 2021, and (3) the Council of the EU and the European Parliament have reached provisional agreement on the EU’s Corporate Sustainability Reporting Directive (CSRD).

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