Senior/mezzanine creditor intercreditor issues—document amendments and payment controls
Produced in partnership with Hogan Lovells International LLP

The following Banking & Finance practice note produced in partnership with Hogan Lovells International LLP provides comprehensive and up to date legal information covering:

  • Senior/mezzanine creditor intercreditor issues—document amendments and payment controls
  • Amending senior financing terms
  • Entrenched provision—no increase in the amount of the senior debt
  • Entrenched provision—no ability to defer senior debt repayments
  • Entrenched provision—no additional credit support
  • Entrenched provision—anti-layering
  • Amending mezzanine finance terms
  • Amendments that are typically prohibited
  • Amendments to prevent financial covenant breach (Mezzanine Cure rights)
  • Market flex
  • More...

Senior/mezzanine creditor intercreditor issues—document amendments and payment controls

This Practice Note discusses two types of provisions that are frequently included in intercreditor agreements that involve both senior and mezzanine lenders:

  1. controls on the ability of senior and mezzanine lenders to amend financing terms without consent from the other creditor class, and

  2. senior creditor controls over payments to mezzanine lenders from the borrower group

The note gives an overview of the provisions and highlights commonly negotiated areas.

For an explanation of the different provisions found in intercreditor agreements, see Practice Note: Intercreditor agreement—key provisions and for an introduction to senior/ mezzanine intercreditor agreements in particular, see Practice Note: Senior/mezzanine creditor intercreditor issues—introduction.

For a straightforward intercreditor agreement with accompanying drafting notes, see Precedent: Intercreditor deed—single company borrower—single secured senior lender—single secured junior lender—single unsecured subordinated lender.

More detailed information on enforcement issues can be found in Practice Note: Senior/mezzanine creditor intercreditor issues—enforcement.

Practice Note: Intercreditor rights comparison table—junior debt instruments provides a table setting out commonly negotiated positions for junior lenders on a leveraged finance transaction in the upper end of the market.

Practice Note: Acquisition finance—introductory guide provides an introductory guide to acquisition finance while the Glossary of acquisition finance terms and jargon explains some commonly used terms.

Amending senior financing terms

The basic principle is that senior lenders can amend the senior finance documents at any time without mezzanine consent, apart from

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