Intercreditor Agreements in Second Lien Financing Transactions

Negotiating and Drafting Agreements to Minimize Lienholder Disputes

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


Conducted on Tuesday, September 1, 2009

Program Materials

This seminar will analyze current trends in negotiations and disputes between first and second lienholders, provide best practices for drafting key provisions of intercreditor agreements, and discuss the most recent draft of the ABA Model Intercreditor Agreement.

Description

Intercreditor agreements are implicated in debt restructuring, loan workouts, foreclosure and bankruptcy. Practitioners involved in dealing with distressed loans must understand the pitfalls in existing intercreditor agreements that are at the heart of disputes between creditors.

Intercreditor agreements are integral in asset-based lending which is becoming a more attractive financing vehicle in the current economy. Transactional attorneys must understand the framework underlying lien subordination and issues critical to negotiating and drafting intercreditor agreements.

To help resolve the most common and contentious disputes between first and second lienholders, the ABA is in the process of developing a Model Intercreditor Agreement. The most recent draft was published July 30, 2009.

Listen as our authoritative panel of attorneys discusses common disputes between first and second lienholders and outlines negotiating and drafting techniques to address these disputes.

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Outline

  1. Trends in second lien financing and enforceability of intercreditor agreements
  2. Critical provisions in intercreditor agreements
    1. Lien v. payment subordination
    2. Absolute priority of security interests in collateral
    3. Composition of first lien obligations
    4. Cap on amount of first lien obligations
    5. Relative enforcement rights of security interests in collateral
  3. Analysis of ABA Model Intercreditor Agreement
    1. Contests to perfection, priority and enforcement
    2. Control of enforcement process
    3. Modification of intercreditor agreement
    4. Release of liens
    5. Purchase of collateral by second lien lender
    6. Rights in event of borrower’s bankruptcy

Benefits

The panel will review these and other key questions:

  • What is the difference between lien subordination and payment subordination?
  • Which intercreditor terms are critical in loan workout situations?
  • What does the ABA Model Intercreditor Agreement offer to resolve disputes between lienholders?

Faculty

Joachim, Mark
Mark B. Joachim

Partner
Arent Fox

Mr. Joachim is a member of the firm’s Bankruptcy and Financial Restructuring and Corporate Groups. His practice...  |  Read More

Michael D. Schiffer
Michael D. Schiffer

Partner
Venable

He advises publicly and privately held REITs and other corporations in connection with major transactions, corporate...  |  Read More

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