Background 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

This Practice Note sets out key cases and associated relevant content in relation to contractual subordination and intercreditor arrangements. For further information on intercreditor issues, see Practice Notes: • Subordination • Introductory guide to Intercreditor Agreements, and • How to draft and negotiate intercreditor arrangements in loan transactions A full list of our intercreditor materials can be found in: • Intercreditor arrangements—overview • Intercreditor issues in finance transactions—overview • Intercreditor issues on debt restructurings—overview, and • Acquisition finance: intercreditor issues—overview For information on: • rules of priority under general law, see Priority between security interests • acceleration of debt and enforcement of security, see Enforcing security—overview and Acceleration of debt and enforcement of security—key cases • issues relating to guarantees and set-off, see Guarantees—overview Set-off and netting in finance transactions—overview respectively • construction and interpretation, see Practice Note: Construction of finance documents—key cases and Contractual interpretation for Banking & Finance lawyers—overview Contractual subordination Names of parties Judgment date Case summary Relevant content The Joint Administrators of Lehman Brothers Holdings PLC (In Administration)

This Deed is made [insert day and month] 20[insert year] Parties 1 [insert name of party] of [insert address] (the Senior Lender); 2 [Insert name of party] of [insert address] (the Junior Lender); 3 [insert name of party], a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert registered office] (the Subordinated Lender); and 4 [insert name of party], a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert registered office] (the Borrower). Recitals: (A) The Senior Lender has agreed to provide the Borrower with a loan facility on the terms of the Senior Facility Agreement (as defined below). (B) The Junior Lender has agreed to provide the Borrower with a loan facility on the terms of the Junior Facility Agreement (as defined below). (C) It is a condition precedent to the provision of each of the Senior Facility and the Junior Facility (each as defined below) that the parties enter into this Deed. (D) [[insert further details if required]] The parties agree: 1 Definitions and interpretation

The European leveraged finance loans market prides itself on innovation and on its ability to adapt quickly and develop products to cater for current economic conditions. Unitranche facilities have become a firm feature of the leveraged loans mid-market. Their growth in popularity has been in part due to the proliferation of private debt funds entering the market since the last financial crisis and also a reaction to the current constraints on the amount of leverage which regulated banks can provide for individual transactions. Unitranche facilities are usually provided by one lender, or on larger deals by a small club of lenders, and are not intended to be syndicated. A trend in recent years has seen the growth in the number of debt funds who are willing and able to provide jumbo-sized unitranche facilities. There are a number of intercreditor issues thrown up by the nature of these transactions which need careful consideration by the parties. What are unitranche deal structures? Put simply, a unitranche is designed to replace the need for separate senior and

The table below provides an overview of key points that a junior lender should check for when reviewing a straightforward intercreditor agreement involving senior secured lenders, junior secured lenders and unsecured subordinated creditors. It is aimed at users with limited experience of intercreditor agreements. The table focuses on the most important and common issues on a straightforward secured bilateral corporate loan transaction and does not aim to cover every possible negotiating point, nor does it cover points on specialist or more complicated transactions such as those in the leverage finance market. What is acceptable will be influenced by the type of transaction, the particular lender involved, as well as the relative negotiating strength of the parties. For information on intercreditor issues in specialist transactions, see Links to useful intercreditor materials below. Links to useful intercreditor materials Introductory materials For an introductory note on intercreditor agreements, including information on common provisions in intercreditor agreements, see Practice Note: Introductory guide to Intercreditor Agreements. Practice Note: How to draft and negotiate intercreditor arrangements in loan transactions provides introductory

The table below provides an overview of key points that a senior lender should check for when reviewing a straightforward intercreditor agreement involving senior secured lenders, junior secured lenders and unsecured subordinated creditors. It is aimed at users with limited experience of intercreditor agreements. The table focuses on the most important and common issues on a straightforward secured corporate loan transaction and does not aim to cover every possible negotiating point, nor does it cover points on specialist or more complicated transactions such as those in the leverage finance market. What is acceptable will be influenced by the type of transaction, the particular lender involved, as well as the relative negotiating strength of the parties. For information on intercreditor issues in specialist transactions, see: Links to useful intercreditor materials below. Links to useful intercreditor materials Introductory materials For an introductory note on intercreditor agreements, including information on common provisions in intercreditor agreements, see Practice Note: Introductory guide to Intercreditor Agreements. For a precedent intercreditor agreement that can be used on a straightforward transaction, see Precedent:

Background The aim of the intercreditor agreement (also known as a deed of priority) is to try and deal with potential conflicts which will inevitably arise between the different classes of secured lender on a restructuring. Waterfall of payments The intercreditor agreement usually sets out a payment waterfall directing the security trustee how to apply any money received by it (whether sale proceeds, proceeds of litigation or payments from a debtor wrongly paid to a junior creditor and handed over under turnover provisions) either (i) in all circumstances or (ii) during normal operations (pre-enforcement) and post enforcement ie a 'flip' clause (see below). The payment waterfall will generally provide for the security trustee's fees to be paid out first, and then money paid to creditors according to their ranking (usually secured lenders appearing at the top of the list) with any surplus being returned to the debtors. A typical payment waterfall may require the security trustee to apply monies received towards: • first—sums owing to the security trustee • second—enforcement costs and expenses incurred

This table is a high level summary of common negotiated outcomes across a range of intercreditor issues affecting the relationship between the lenders under a super senior revolving credit facility and senior secured noteholders. For further information on the issues discussed in this table, see Practice Note: Introductory guide to Intercreditor Agreements. For a table comparing common intercreditor positions for mezzanine lenders, second lien lenders and subordinated noteholders, see Practice Note: Intercreditor rights comparison table—junior debt instruments. For an explanation of the meaning of many common acquisition finance terms, see Practice Note: Glossary of acquisition finance terms and jargon. Super senior revolving credit facility Senior secured notes Structure and ranking Which entity(ies) in the transaction structure may incur the debt? The super senior revolving facility is usually available to the company and any member of the target group which meets borrower eligibility criteria and has acceded to the facility agreement as a borrower. The notes are usually issued by the company or a special purpose finance

This table: • 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 • is based on documentation from the 'upper mid-market' and 'large capitalisation segments of the European leveraged finance market • assumes that a second lien facility is separately documented from the senior debt and votes as a separate creditor class Intercreditor rights may vary due to (among other things): • structural aspects bespoke to a particular transaction • whether debt is distributed in Europe or the US • documentary requirements of individual investors (particularly relevant if junior debt is pre-placed); and • 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: • Introductory guide to Intercreditor Agreements • Intercreditor agreements—effective releases Mezzanine facility Second lien facility Senior subordinated notes Structure and ranking

These are Scots law injunctions. They are similar in nature and effect to English freezing and mandatory injunctions

This Practice Note considers the position on interdict and interim interdict in Scotland. For guidance on: • some other forms of relief in Scottish civil litigation, see Practice Notes: Retention and rescission in Scottish civil litigation and Specific implement and interim specific implement in Scottish civil litigation • the closest equivalent procedure in England and Wales, see: Interim and final injunctions—overview, Freezing injunctions—overview and Search and imaging orders—overview which, as well as giving an overview of these different types of injunctions, link through to more detailed guidance on various aspects of such injunctions in England and Wales Key: • CCA 1981—Contempt of Court Act 1981 • CSA 1988—Court of Session Act 1988 • CR(S)A 2014—Courts Reform (Scotland) Act 2014 • RCS—Rules of the Court of Session 1994 • SCCR—Act of Sederunt (Sheriff Court Caveat Rules) 2006, SSI 2006/198 • SC(S)A 1907—Sheriff Courts (Scotland) Act 1907 Interdict—nature and scope Interdict is a remedy granted by the court ‘against a wrong which is in the course of being committed or

The return earned on funds which have been loaned or invested (ie the amount a borrower pays to a lender for the use of their money).