Equal Priority Intercreditor Agreement

One lender assigned the other lender to a decision on how the proceeds should be distributed under its intercredit agreement and the case eventually ended on appeal to the Third Circuit. In upholding the decision of the first instance, the Third Circle interpreted strictly the determination of waterfalls in the interconnection agreement, closely analyzed the concepts of bankruptcy and found that the appropriate guarantees and plan distributions received by the lenders did not directly correspond to the definition of the interconnection agreement of „guarantees“ or „proceeds of security“. If you are not the only lender for a business or group, it can be daunting to fairly meet the business needs of other creditors while ensuring that you protect your own position. Below are Gateley`s top tips for using intercreditor arrangements.