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Subordination and Intercreditor Agreements

Learn tips and practical solutions to help you understand intercreditor agreements and the issues that arise.

Intercreditor agreements are a common feature of financing transactions ranging from middle market acquisition financings to leveraged recapitalizations to large cap multi-tranche financings. Whether you are a bank or hedge fund making a senior loan, a mezzanine fund or insurance company making a subordinated loan, or a seller taking back a note as part of the sale of your business, you will need to understand intercreditor agreements and the issues that arise in all of them. This topic will take an in-depth look at intercreditor agreements and will dig into both the high-level issues that all senior and junior creditors must be familiar with and the more subtle issues that can make a big difference at crunch time. Starting with an overview of intercreditor fundamentals, we will cover the key intercreditor issues from both the senior lender's and junior lender's perspective and offer drafting tips and practical solutions to help understand how to resolve those issues in typical intercreditor contexts. We will also look at the unique issues that arise under different credit structures that have become more common in the marketplace and how they can impact the negotiations between different creditors. You will come out with a deeper knowledge of intercreditor agreements and how to navigate and negotiate the issues more efficiently.

Runtime: 93 minutes
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Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Basics of Intercreditor Agreements

  • Who Are the Parties?
  • Motivations of Different Parties

Fundamental Concepts and Practical Applications

  • Blockage
  • Standstill
  • Senior Debt Cap
  • Permitted Payments
  • Cushions
  • Cross-Default vs. Cross-Acceleration

Bankruptcy Issues

  • Consent to DIP Financing
  • No Challenges to Senior Position or Priority
  • Failure to Maintain Perfection
  • Failure to File Proofs of Claim

Syndicated and Participated Credits

  • Voting Rights
  • Exercise of Remedies

Alternative Credit Structures and Their Effects on Intercreditor Agreements

  • Second Lien Loans

- Model First Lien/Second Lien Intercreditor Agreement

  • Split-Collateral Loans

- Revolving Lenders vs. Term Lenders

- "Last-out" vs. "First-out" Lenders

  • Unitranche Loans

- Agreement Among Lenders

Drafting Tips and Market Solutions

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Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Webinar

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

Audio & Reference Manual

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

R. Marshall Grodner, Esq.

R. Marshall Grodner, Esq.

McGlinchey Stafford, PLLC

  • Member in McGlinchey Stafford, PLLC’s Baton Rouge office
  • Practice focuses primarily in commercial transactions, secured transactions, commercial finance, opinion letters, commercial real estate and gaming law; serves as chair of the firm's legal opinion committee
  • Served as an adjunct professor at the Louisiana State University Law Center
  • Wrote and co-wrote several articles in law reviews and other publications dealing with secured transactions, commercial real estate and other business law issues
  • Delivered lectures and papers throughout the country dealing with loan documentation, secured transactions, ethics and professionalism in the transactional context and real estate law
  • Known for his experience in secured lending, he has an extensive practice representing both Louisiana and out-of-state lenders in numerous large commercial transactions, locally, regionally and nationally
  • Currently the vice chair of the Commercial Finance Committee of the Business Law Section of the American Bar Association; co-chair of the Joint Task Force for Deposit Account Control Agreements, of the Business Law Section of the ABA
  • Past chairman of the Loan Documentation Subcommittee of the Commercial Finance Committee of the Business Law Section of the ABA
  • Has served as both lender's and borrower's counsel in connection with large commercial real estate financing transactions, including acquisition finance, construction finance, project finance, and refinancing on casinos, offices, industrial sites, and apartment complexes in Louisiana; has also served as local Louisiana counsel on numerous national and multi-state commercial transactions involving real estate
James C. Schulwolf

James C. Schulwolf

Shipman & Goodwin LLP

  • Partner at Shipman & Goodwin LLP
  • Represents senior and mezzanine lenders, institutional investors, venture capital investors including SBICs, private equity funds, emerging growth companies and private companies in financing, investment, leasing, acquisition, corporate, licensing and restructuring transactions
  • Advises clients with respect to structuring, negotiating, and closing complex financing, investment, and acquisition transactions, and also advises clients, including municipalities, universities, and nonprofit entities with regard to interest-rate swaps and hedging transactions
  • Past chair of the Commercial Finance Committee of the American Bar Association's Business Law Section and currently a member of the Business Law Section Council
  • Experience includes the representation of senior and mezzanine lenders in complex commercial, asset-based, and acquisition financings; SBICs and venture capital funds; emerging growth companies; buyers, sellers and sponsors; and institutional investors in direct investments, fund of funds investments, and investments in private equity funds
  • Recognized authority on drafting and negotiating intercreditor and subordination agreements on behalf of senior and subordinate lenders and is the author of "Controlling Your Destiny-Key Issues in Subordination and Intercreditor Agreements", The Secured Lender, and "Financing the Family-Owned Business"
  • Lectures frequently on issues relating to commercial and mezzanine lending, intercreditor issues, loan syndications and participations, venture finance, and venture capital investment
  • J.D. degree, New York University School of Law, B.A. degree, cum laude, Amherst College
  • Can be contacted at 860-251-5949, fax 860-251-5311 or [email protected]
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Product ID: 400764
Published 2017
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