Intercreditor agreement (Banking & Finance) definition

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A comparison of the LMA REF Intercreditor Agreements against the LMA Leveraged Intercreditor Agreement

This Practice Note compares key terms of the Loan Market Association (LMA) intercreditor agreement for leveraged acquisition finance transactions (senior/mezzanine) (the LMA Leveraged Intercreditor Agreement), the LMA intercreditor agreement for real estate finance transactions (senior/mezzanine) where the mezzanine debt has been structurally subordinated (the LMA REF Intercreditor Agreement—Structural Subordination) and the LMA intercreditor agreement for real estate finance transactions (senior mezzanine) where the mezzanine debt is not structurally subordinated but subject to contractual subordination in the intercreditor agreement only (the LMA REF Intercreditor Agreement—Contractual Subordination only) (together the Intercreditor Agreements).For more information in relation to the principles of subordination and the key provisions of intercreditor agreements in general, see Practice Notes: Subordination and Intercreditor agreement—key provisions.The LMA leveraged and REF intercreditor agreementsThe LMA Leveraged Intercreditor AgreementThe LMA Leveraged Intercreditor Agreement was the first of the LMA intercreditor agreements to be published and is suitable for adaptation to different kinds of transactions. Prior to the LMA REF Intercreditor Agreement being published it was often adapted for use in real estate finance...

Introductory guide to Intercreditor Agreements

This Practice Note provides an introduction to intercreditor agreements and their key provisions. This Practice Note:•explains the purpose of having an intercreditor agreement and when an intercreditor agreement would be used instead of a deed of priority or subordination deed•provides links to helpful information on how to draft and negotiate an intercreditor agreement•sets out the key parties to an intercreditor agreement•provides an explanation of the key provisions found in an intercreditor agreement, including:◦ranking and subordination◦restrictions on payments to junior creditors◦amendments to transaction documents◦restrictions on taking enforcement action◦control of security enforcement strategy, and◦release of claims on disposalsDifferent types of transactions have different typical structures and types of debt and there are also significant variations within each type of transaction. This Practice Note discusses provisions that are commonly seen in most intercreditor agreements.Purpose of an intercreditor agreementWhy have an intercreditor agreement?The key purpose of the intercreditor agreement is to ensure that each type of debt used in the transaction has a risk commensurate with its pricing, ie senior debt (which has a...