Intercreditor Agreement Practical Law

In addition to the release provisions, European intercreditors with a second right of pledge generally allow the securities agent (subject to the fair sale provisions discussed above) to transfer subordinated pledge rights, intra-group liabilities and/or shareholder loans to buyers of assets in an executing position. The option of assigning liabilities could be more effective than the elimination of execution-related subordinated debt. European intercreditors with a second right of deposit generally contain a much broader provision on stopping implementation than US intercreditors for intercreditors with a second right of deposit, in particular because there is no European equivalent of automatic suspension in Chapter 11. The scope of the limited enforcement measures generally prohibits any acceleration of the second deposit obligation, any execution of the payment or request for recovery of the second pledge debt and any taking or reflection with others to initiate insolvency proceedings, any opening of insolvency proceedings by the second trustee or second holder of pledges of judicial enforcement of any of the rights and remedies under the second docume Recorded or applicable law. whether as an insured or unsecured creditor. The standstill period for the application of the legislation traditionally provides for (i) a period of 90 days from the notification of defaults under the priority credit agreement; (ii) a period of 120 days from the notification of the failure of the Financial Covenant under the priority credit agreement (although this is much rarer since the introduction of Cov lite financing on the European market), and (iii) a period of 150 days from the notification of another default under the priority credit agreement. However, the time limit for stopping execution is now often the subject of a trial and, for some agreements, for example, it is 120 days after notification of the case of delay. In the case of European intermediaries with a second deposit right, priority creditors monitor enforcement (except in exceptional circumstances). In addition, the senior officer generally has the right to repeal the junior officer`s instructions to the security officer, so that it is only after the standstill period that the second collateral can influence the date of enforcement actions. The European version of the call option is similar, but it also provides for the obligation to redeem hedging commitments that may or may not be included in US intercreditors for second pledge rights.

As the number of financings affecting both sides of the Atlantic continues to increase and the complexity of these financings increases, interconnection agreements for financing with several legal services will remain important and interesting. Although there is no uniform or uniform approach to documenting these intercreditor concepts, both sides of the Atlantic are now widely understood as to the different provisions and their underlying rationale. As a result, most transactions are carried out on a mixed basis, with many of the aforementioned European or American elements being combined into a US or European intermediary….

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