Basic introduction to super senior, senior, mezzanine and junior debt
Basic introduction to super senior, senior, mezzanine and junior debt

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Basic introduction to super senior, senior, mezzanine and junior debt
  • Brexit impact
  • Capital structures
  • Super senior debt
  • Senior debt
  • Second lien debt
  • Mezzanine debt
  • Junior debt
  • Mezzanine/junior standstills
  • Payment priorities and waterfalls
  • more

The range of funding options open to companies has exploded, resulting in a vast array of different capital and security structures. Before the 2007/8 credit crunch, it was common to see senior debt (usually held by banks), followed by mezzanine debt and then junior debt, all of which ranked above unsecured creditors and shareholders/equity holders.

Immediately following the 2007/8 credit crunch, banks were less willing or able to lend new monies and so companies increasingly looked to the capital markets to maximise access to credit. This has resulted in more layers of debt plus the emergence of senior secured bonds, which rank much higher up the capital structure (see Practice Note: Bonds and notes) and super senior facilities.

Brexit impact

As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. References to exit day in many Brexit SIs are to be read as reference to IP completion day (Implementation Period completion day, defined in clause 39 as 31 December 2020 at 11.00 pm) (unless that provision is expressly disapplied by the SI in question). For further details, see News Analysis: Brexit—impact of the Withdrawal Agreement and European Union (Withdrawal Agreement) Act