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Intercreditor Agreement
Define rights and priorities between multiple lenders with this Intercreditor Agreement Template.
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Intercreditor Agreement Template
This Intercreditor Agreement (“Agreement”) is made and entered into on [Date], by and between:
Senior Lender: [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Junior Lender: [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Borrower: [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Together referred to as the “Parties.”
1. Purpose
The Parties enter into this Agreement to define their respective rights, obligations, and remedies with respect to loans made to the Borrower and to establish priority in repayment.
2. Definitions
Key terms used in this Agreement include:
“Senior Debt”: Obligations owed to the Senior Lender under the Senior Loan Documents.
“Junior Debt”: Obligations owed to the Junior Lender under the Junior Loan Documents.
“Collateral”: Property pledged by the Borrower to secure repayment of debts.
3. Priority of Payment
The Senior Debt shall be paid in full before any payments are made on the Junior Debt.
Any payments received by the Junior Lender in violation of this section shall be promptly turned over to the Senior Lender.
4. Collateral and Security Interests
Senior Lender shall have a first-priority security interest in the Collateral.
Junior Lender acknowledges its subordinate interest and agrees not to enforce its rights until the Senior Debt has been repaid.
5. Standstill Provisions
The Junior Lender agrees not to take enforcement action (foreclosure, collection, etc.) against the Borrower or Collateral for a period of [X] days after a default, unless consent is obtained from the Senior Lender.
6. Information Sharing
The Borrower shall provide financial statements, notices of default, and other relevant information to both Lenders. Senior and Junior Lenders shall notify each other of material events affecting repayment.
7. Default and Remedies
Upon a Borrower default, the Senior Lender shall have primary control over enforcement actions.
The Junior Lender may only act after the Senior Lender has been repaid or consents in writing.
8. Amendments to Loan Documents
Neither Lender shall materially amend its loan documents with the Borrower in a way that adversely affects the other Lender without prior written consent.
9. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of [State/Country].
10. Dispute Resolution
Any dispute under this Agreement shall first be negotiated in good faith, and if unresolved, submitted to mediation or arbitration before litigation.
11. Entire Agreement
This Agreement constitutes the entire understanding between the Parties and supersedes all prior negotiations or agreements regarding the subject matter herein.
Signatures
Senior Lender: ___________________________ Date: _________
Name/Title: [Full Name, Title]
Junior Lender: ___________________________ Date: _________
Name/Title: [Full Name, Title]
Borrower (Acknowledgment): ___________________________ Date: _________
Name/Title: [Full Name, Title]
Details
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Intercreditor Agreement
INTERCREDITOR AGREEMENT FAQ
What is an Intercreditor Agreement?
An Intercreditor Agreement is a contract between two or more lenders that establishes their respective rights, obligations, and priorities in relation to a borrower’s debt. It defines who gets paid first and how disputes or defaults will be handled.
Why is an Intercreditor Agreement important?
It prevents conflicts between lenders by clearly stating repayment order, collateral claims, enforcement rights, and remedies. Without such an agreement, disputes could delay debt recovery and increase financial risks for all parties involved.
When should you use an Intercreditor Agreement?
Use this agreement when multiple lenders finance the same borrower, such as in syndicated loans, mezzanine financing, or layered debt structures. It is particularly important when senior and junior creditors share collateral.
What should an Intercreditor Agreement include?
It should include repayment priorities, collateral arrangements, standstill provisions, information-sharing terms, dispute resolution procedures, and governing law. Clear drafting helps avoid costly legal battles.
How does an Intercreditor Agreement protect lenders?
It ensures senior lenders’ priority is respected while still defining the rights of junior creditors. It also provides a framework for cooperation in workouts, restructurings, or insolvency proceedings.
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