Drafting Standstills in Intercreditor Agreements: Balancing Rights and Remedies of Junior and Senior Lienholders
Structuring Duration, Commencement, Expiration, Notice, Reinstatement, and Other Provisions
A live 90-minute premium CLE video webinar with interactive Q&A
This CLE course will discuss critical issues involved in drafting and negotiating standstill provisions of intercreditor agreements from the perspective of both senior and junior lienholders. Topics the program will address include, among others, the scope, nature, duration, and commencement of the standstill, post-termination of the standstill, notice to senior lienholder, and reinstatement or reset of the standstill period.
Outline
- Overview
- The "enforcement priority"
- First lien lender perspective
- Second lien lender perspective
- Scope and nature of the standstill
- Lien subordination vs. debt subordination
- Permitted actions by second lien lender
- Exercise of rights of second lien lender as an unsecured creditor
- Key standstill provisions/negotiating points
- Duration
- Commencement
- What happens when the standstill period ends?
- Applicability of turnover provision
- Notice to the first-lien lender of intent to exercise remedies
- Scope of "back-end" standstill
- Reinstatement/reset of the standstill period
- Right of a senior creditor to take over remedies
Benefits
The panel will review these and other key issues:
- The scope and length of standstill periods from the perspective of senior and junior lienholders and the basis for making such determinations
- Actions that junior lienholders may take during the standstill period
- Recent court interpretation of intercreditor agreements concerning rights and remedies of junior lienholders
- Split collateral structures where the working capital lender has a first lien on the working capital assets and a second lien on the remainder of the collateral and where the term lender has a second lien on the working capital assets and a first lien on the remainder of the collateral
- Standstills in the context of a "unitranche" structure
Faculty
Katherine E. Bell
Partner, Corporate Department
Paul Hastings
Ms. Bell's practice focuses on commercial and corporate finance transactions. She regularly represents... | Read More
Ms. Bell's practice focuses on commercial and corporate finance transactions. She regularly represents commercial banks, investment banks, finance companies, other lenders, and borrowers in working capital facilities (cash flow and asset-based), acquisition financings, structured financings, and other leveraged finance transactions including leveraged buyouts, restructurings, and recapitalizations. She has significant experience negotiating intercreditor relationships, including 1st Lien/2nd Lien transactions, split collateral arrangements, and unitranche “A/B” transactions.
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Jennifer B. Hildebrandt
Partner, Corporate Department
Paul Hastings
Ms. Hildebrandt represents banks, commercial finance companies, hedge funds, and other lenders in commercial and... | Read More
Ms. Hildebrandt represents banks, commercial finance companies, hedge funds, and other lenders in commercial and corporate finance matters, leveraged finance transactions, asset-based finance transactions, multi-tranche and multi-lien transactions, and restructurings. In particular, she has extensive experience representing lenders in two lien deals, unitranche transactions, and bank / bond deals.
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