The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:
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.
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:
principal debt claims
It is often important to consider the tax position as releasing a borrower from a debt
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
0330 161 1234
To view our latest legal guidance content,sign-in to Lexis®PSL or register for a free trial.