Drukarnia Petit
23.04.2022 Petit Bez kategorii

Intercreditor Agreement Parties

As the name suggests, an intercreditor agreement is a contract between two or more creditors who have lent money to the same borrower. The agreement outlines the terms and conditions for the distribution of payments made by the borrower and can also include provisions for how to handle potential default scenarios.

When it comes to an intercreditor agreement, there are typically two main parties: the senior creditor and the junior creditor.

The senior creditor is the lender who has priority over all other creditors and has the first claim on any assets the borrower has. This means that if the borrower goes bankrupt or defaults on the loan, the senior creditor will be paid first before any other creditors. In return for this priority status, the senior creditor usually agrees to lend more money at a lower interest rate.

The junior creditor, on the other hand, is the lender who has a lower priority claim on the borrower`s assets and is repaid after the senior creditor. Junior creditors often charge a higher interest rate to compensate for the higher risk they are taking on.

In addition to these two main parties, an intercreditor agreement may also include other parties such as:

1. The borrower: This is the entity that is borrowing the money and is responsible for repaying the loans. The borrower is a party to the agreement as they are bound by its terms and conditions.

2. The agent: This is a third party who acts as a mediator between the borrower and the lenders. The agent is responsible for handling the distribution of payments made by the borrower and enforcing the terms of the agreement.

3. The collateral agent: This is a party that is responsible for administering any assets that are used as collateral for the loans. The collateral agent ensures that the assets are properly secured and may have the authority to sell the assets if the borrower defaults on the loans.

Overall, an intercreditor agreement is a complex legal document that requires the expertise of a skilled attorney to draft and negotiate. Understanding the parties involved in the agreement is crucial in order to ensure that the terms and conditions are fair and effectively protect the interests of all parties involved.