Enforceability of Intercreditor Agreements in Bankruptcy: Maximizing Recovery for First and Second Lienholders

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Thursday, August 27, 2020

Recorded event now available

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Program Materials

This CLE webinar will guide commercial finance counsel in drafting intercreditor agreements, and those seeking to enforce or resist enforcement of intercreditor agreements during bankruptcy proceedings. The panel will discuss ways that first lien and second lien lenders can best protect their economic interests in the event of bankruptcy.

Description

Bankruptcy courts must often resolve issues regarding the enforceability of intercreditor agreements between first and second lien lenders. An intercreditor agreement executed by first and second lien lenders who have separate credit agreements with the borrower is quite typical.

Section 510 of the Bankruptcy Code states that subordination agreements are enforceable in bankruptcy cases just as they are under non-bankruptcy law. Over the years, case law has evolved regarding the enforceability of provisions that restrict what some courts believe are fundamental bankruptcy rights.

Listen as experienced finance and bankruptcy attorneys discuss the forms of intercreditor agreements, current case law on the enforceability of intercreditor agreements in bankruptcy proceedings, and how first lien and second lien lenders can protect their economic interests in the event of bankruptcy.

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Outline

  1. Recent case law on the enforceability of intercreditor agreements in bankruptcy proceedings
    1. Cases holding that an intercreditor agreement cannot waive a second lien lender's fundamental bankruptcy rights
    2. Cases holding that an intercreditor agreement may waive statutory bankruptcy rights if enforceable as a matter of applicable state law
  2. Best practices when drafting and negotiating intercreditor agreements to protect lender interests, including discussion of forms of intercreditor agreements currently being used in the market

Benefits

The panel will review these and other relevant issues:

  • What are the lessons for lenders' counsel from recent bankruptcy case law regarding intercreditor agreements?
  • Which intercreditor provisions require special attention as to enforceability in bankruptcy?
  • How can senior and subordinate lenders best protect their interests in bankruptcy?

Faculty

Anderson, Eric
Eric W. Anderson

Partner
Parker Hudson Rainer & Dobbs

Mr. Anderson concentrates his practice in bankruptcy, workouts, financial restructuring and commercial finance. He...  |  Read More

Dobbs, Edward
C. Edward Dobbs

Partner
Parker Hudson Rainer & Dobbs

Mr. Dobbs’ practice for more than 41 years has been concentrated in documenting and closing commercial loans for...  |  Read More

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