Intercreditor Agreement Template: Priority and Payments

INTERCREDITOR AGREEMENT FAQ

What is an Intercreditor Agreement?

An Intercreditor Agreement is a contract between two or more lenders that establishes their respective rights, obligations, and priorities in relation to a borrower’s debt. It defines who gets paid first and how disputes or defaults will be handled.

Why is an Intercreditor Agreement important?

It prevents conflicts between lenders by clearly stating repayment order, collateral claims, enforcement rights, and remedies. Without such an agreement, disputes could delay debt recovery and increase financial risks for all parties involved.

When should you use an Intercreditor Agreement?

Use this agreement when multiple lenders finance the same borrower, such as in syndicated loans, mezzanine financing, or layered debt structures. It is particularly important when senior and junior creditors share collateral.

What should an Intercreditor Agreement include?

It should include repayment priorities, collateral arrangements, standstill provisions, information-sharing terms, dispute resolution procedures, and governing law. Clear drafting helps avoid costly legal battles.

How does an Intercreditor Agreement protect lenders?

It ensures senior lenders’ priority is respected while still defining the rights of junior creditors. It also provides a framework for cooperation in workouts, restructurings, or insolvency proceedings.

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