Negotiating Intercreditor Agreements as Bankruptcy Filings Soar

Strategies for First and Second Lienholders in an Uncertain Enforcement Environment

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

Conducted on Tuesday, May 26, 2009

Program Materials

This seminar will discuss the current gray areas surrounding the enforceability of intercreditor agreements in bankruptcy proceedings and offers best practices for negotiating an enforceable agreement.

Description

The second lien financing market has exploded in recent years, growing from $570 million in 2002 to over $16 billion in 2005. The current wave of major bankruptcies will present several issues regarding the enforceability of intercreditor agreements between first lien and second lien lenders.

Even though the Bankruptcy Code clearly defines lien subordination and payment subordination, the law remains unclear on the enforceability of intercreditor agreement provisions that take away fundamental bankruptcy rights.

The negotiation of intercreditor agreements between first and second lienholders is often complicated because the risks are high and the financial interests of the lenders are extremely opposed. A clear understanding of the issues important to each lender supports smoother negotiations.

Listen as our panel of attorneys discusses the enforceability of intercreditor agreements in bankruptcy proceedings and how first lien and second lien lenders can best protect their economic interests in the event of bankruptcy.

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Outline

  1. Current trends in second lien financing
  2. Recent (limited) case law on the enforceability of intercreditor agreements in bankruptcy proceedings
    1. Courts holding that an intercreditor agreement cannot waive a second lien lender’s fundamental bankruptcy rights
    2. Courts holding that an intercreditor agreement may waive statutory bankruptcy rights if enforceable as a matter of applicable state law
  3. Lessons learned from drafting and negotiating intercreditor agreements

Benefits

The panel will review these and other key questions:

  • How have courts ruled regarding the enforceability of intercreditor agreements during bankruptcy proceedings?
  • What critical lessons have creditors' counsel learned in their experiences drafting and negotiating intercreditor agreements?
  • What are the key provisions in intercreditor agreements — and how can each lender minimize risk through these provisions?

Faculty

Mark N. Berman
Mark N. Berman
Partner
Nixon Peabody

Mr. Berman is a member of the firm's Financial Restructuring and Bankruptcy Practice Group, as well as the Global...  |  Read More

C. Edward Dobbs
C. Edward Dobbs
Partner
Parker Hudson Rainer & Dobbs

Mr. Dobbs' practice for more than 39 years has focused on documenting and...  |  Read More

Randall L. Klein
Randall L. Klein
Principal
Goldberg Kohn

He chairs the firm's Bankruptcy and Creditors' Rights Group. He focuses on protection and enforcement of creditors'...  |  Read More

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