Intercreditor rights comparison table—junior debt instruments
Produced in partnership with Neil Grant

The following Banking & Finance practice note produced in partnership with Neil Grant provides comprehensive and up to date legal information covering:

  • Intercreditor rights comparison table—junior debt instruments

Intercreditor rights comparison table—junior debt instruments

This table:

  1. is a high level summary of common negotiated outcomes across a range of intercreditor issues. It highlights key matters where junior creditors rights align/diverge according to the nature of the junior debt instrument

  2. is based on documentation from the 'upper mid-market' and 'large capitalisation segments of the European leveraged finance market

  3. reflects mezzanine facilities documented after the 2007/8 credit crunch—note that mezzanine debt is infrequently used in the upper mid-market/large cap segments market; and

  4. assumes that a second lien facility is separately documented from the senior debt and votes as a separate creditor class (this is the approach most commonly followed in the European market since 2014 but note that some examples adopt the pre-credit crunch approach under which the second lien debt is documented as a 'Facility D' within the senior facilities agreement)

Intercreditor rights may vary due to (among other things)

  1. structural aspects bespoke to a particular transaction

  2. whether debt is distributed in Europe or the US

  3. documentary requirements of individual investors (particularly relevant if junior debt is pre-placed); and

  4. whether rights have been actively negotiated by a junior creditor or simply included in an 'evergreen' intercreditor agreement negotiated exclusively between the sponsor and senior creditors

For further information on the issues discussed in this table, see Practice Notes:

  1. Intercreditor agreement—key provisions

  2. Intercreditor agreements—effective releases

  3. Senior/mezzanine creditor

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