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Intercreditor arrangements will typically involve at least two types of creditor:
the senior lender(s), whose debt and potentially security ranks highest in the order of payments amongst the creditors, and
the junior lender(s), whose debt and security ranks behind the senior creditor
The borrower will also be a party to the intercreditor arrangements.
On syndicated transactions, the facility agents for the senior and junior lenders will be parties to the intercreditor arrangements, as will the security agent.
For more information, see Key parties to an intercreditor agreement.
The senior lender's lawyers will usually prepare the first draft of the intercreditor arrangements based on a suitable precedent.
When looking for a suitable precedent intercreditor document, it is important to consider:
what type of intercreditor arrangements are being entered into, ie:
subordination of payments—in which case a subordination agreement will be required
priority of security—in which case a deed of priority will be required
both of the above—in which case an intercredito
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