Skip to main content
Newsletter
BankingBeast

Intercreditor agreement

Last updated

Quick Answer

An intercreditor agreement governs the relationship between separate facilities with different lien or payment priorities.1,2

What it is

It fixes lien priority, payment ordering, standstill periods before a junior lender may act, payment blockage on a senior default, and each group's rights in an insolvency proceeding. Unlike an Agreement Among Lenders, it sits between facilities the borrower signed separately, so the borrower is exposed to both sets of remedies rather than one.1,2

Operational context

What good looks like

Why It Matters

The instrument list tells you what the capital structure contains; the intercreditor tells you what happens to it under stress. This is the document the competitive corpus does not assemble for a specific deal.1

Related Questions

What's the difference between an AAL and an intercreditor agreement?

An intercreditor agreement governs relations between separate facilities with different lien or payment priorities; an AAL governs relations inside a single unitranche facility that the borrower experiences as one loan.

Browse all questions →

Frequently Asked Questions

What is Intercreditor agreement in venture capital?

It fixes lien priority, payment ordering, standstill periods before a junior lender may act, payment blockage on a senior default, and each group's rights in an insolvency proceeding.

Why is Intercreditor agreement important for startups?

Understanding Intercreditor agreement is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.T3-05 — Mayer BrownAgreements Among Lenders and Unitranche Facilities — a Fresh Look at a Trending Product (Nov 2023)Mayer Brown(An intercreditor agreement governs the relationship between separate facilities with different lien or payment priorities.)secondary · T3 · debt-capital-structure · document
  2. 2.T2-07 — Loan Market AssociationLMA unitranche intercreditor agreement (recommended form)Loan Market Association(An intercreditor agreement governs the relationship between separate facilities with different lien or payment priorities.)primary · T2 · debt-capital-structure · document

Newsletter

BankingBeast Brief

Deal execution, credit terms, and closing mechanics. Every Tuesday.

Archstone

Run your fund like an institution.

See Archstone