Getting To Grips with Key Intercreditor Agreement Concepts

Cash is King: How and why do intercreditor agreements control cash flows?

• What’s the purpose of an intercreditor agreement?
• The importance of visualising cash flows
• How and why does an intercreditor agreement deal with pre-enforcement cash flows?
• How and why does an intercreditor agreement deal with post-enforcement cash flows?
• Exercise: Assessing recovery of value via cash means vs. non-cash means

Who needs to be a party to an intercreditor agreement?

• Why is scanning the balance sheet important?
• Who is the day one parties?
• The different seams of creditors – what do you need to consider?
• Post day one parties – why do you need to factor these in?
• Exercise: Examining the risks of not putting an intercreditor agreement in place

Approaching drafting

• Types of ‘intercreditor’
• Practical lessons to bear in mind when approaching intercreditors
• What’s often overlooked in the drafting exercise?
• Exercise: Examining the risks of making commercial assumptions – what might go wrong?

Understanding the main commercial aspects of any intercreditor agreement

• Visualising the intercreditor – what are the four key quadrants you need to know?
• Understanding the difference between the ranking of liabilities and the ranking of security
• Understanding the difference between subordination and postponement
• Exercise: Understanding the effect and outcomes of applying contractual subordination
• Key controls: What’s permitted and when?
• Interaction with other finance agreements
• Understanding the basic interplay with hedging
• Dealing with monies creditors shouldn’t have received
• Disposing of assets – pre & post distress considerations
• Understanding the different strands of ‘enforcement action’
• Exercise: Examining mezzanine and junior creditor enforcement considerations
• Control of claims
• The recoveries waterfall and potential dilutions
• Potential issues with non-cash recoveries
• Dealing with changes
• Cross-border considerations

Other commercial considerations

• Main leveraged finance transaction considerations and achieving fair value
• Main real estate finance transaction considerations
• How does a layer of receivables finance within the intercreditor dynamics affect things?
• Exercise: Assessing the impact of financier exit before it is too late
• Multiple intercreditor agreements – when and why?
• Approaching other transaction structures

Please be advised this training course does not constitute legal advice & should not be relied upon as such. Nor can the trainer give legal advice to participants during the sessions.

Our trainer is a highly experienced and sought-after lawyer, advisor, educator, mentor and writer. For almost 30 years and across several different industries, he has written and delivered a wide range of bespoke training courses for individuals, businesses, professional associations and educational establishments.

Over a 20-year legal career, he has advised banks & financial institutions, asset and receivables financiers, alternative lenders, large and SME corporates, private equity houses, property developers, pension trustees, regulators, government departments, directors and private individuals on a wide range of banking and finance related matters.

These have included UK and international cross-border syndicated, club and bilateral finance transactions with individual values exceeding £5 billion. His experience spans across many specialisms including global loans, investment grade lending, leveraged finance, real estate investment & development finance, asset and receivables finance, bridge finance, private wealth finance, project finance, securitisations, bond issues, social housing finance, trade finance, higher education finance, intragroup lending, director and shareholder loans, guarantee & security packages and netting and cash pooling arrangements in addition to general advisory work. He has also advised on refinancings and restructurings involving complex multi-layered intercreditor arrangements and directors’ duties related issues.

As an English law qualified solicitor, our trainer has worked in private practice at Denton Wilde Sapte (now Dentons), Gowling WLG, Wragge & Co and Cobbetts and he is currently a partner at gunnercooke.

As in-house counsel, he worked for several years at Barclays Bank PLC in their Sales Finance and Trade & Working Capital Finance teams, advising on a wide range of UK and international receivables finance, inventory finance, securitisation and other asset finance matters (including invoice discounting, factoring, recourse and non-recourse financing, selective receivables finance, supply finance and full asset-based lending agreements). He has also worked on secondment with the HSBC (UK) Invoice and Equipment Finance legal and business teams, advising on UK and cross border receivables and asset based lending transactions, including hire purchase, lease finance and asset purchase finance.

During his time at Gowling WLG our trainer worked as PSL Legal Director and provided education, training and advice on complex areas of law across the firm. He was also responsible for risk monitoring and developing and maintaining knowhow, precedents and practice & briefing notes, in addition to assessing, piloting and implementing various legal technology tools.

He has written and delivered banking and finance related and legal training for lawyers and non-lawyers alike of all levels of experience and for several professional associations including the Loan Market Association. Having worked both in private practice and in-house with leadership, sales, relationship, risk, compliance, legal, transaction management, operations and product teams, he understands the obstacles that need to be overcome on transactions and how to get deals over the line successfully. Consequently, his training focuses on providing participants with the essential foundations, commercial awareness and thought processes necessary to manage and run transactions effectively and with minimum risk.

Our trainer writes regularly on banking and finance and legal technology related topics and he sits on the editorial board for Butterworths’ Journal of International Banking and Financial Law. He was also a member of the PSL advisory board for Lexis PSL’s banking and finance module from 2017 to 2023 and has also sat on the ABFA (now UK Finance) legal and technical committee.

He has participated in numerous major law reform projects and consultations including the University of Oxford led Secured Transactions Law Reform Project, the City of London Law Society’s Secured Transaction Code Project, the UK Jurisdiction Taskforce consultation on crypto-assets, distributed ledger technology and smart contracts and the England & Wales Law Commission’s calls for evidence on smart contracts and digital assets. He has also provided input into several UK Government legislative consultations.

As a mentor, he has helped the development of many lawyers and young professionals and he has also been a member of the law firm panel at Barclays Eagle Labs Legal Tech Hub, London providing help, support and pro-bono advice to a wide range of new start-up legal-tech businesses from the UK and overseas.

• Develop a solid commercial understanding of intercreditor principles that can be applied to drafting and negotiating different types of intercreditor agreements.
• Understand how and why an intercreditor agreement controls cash flows between different creditors.
• Understand who needs to be a party to an intercreditor agreement and why.
• Understand the structure and main commercial aspects of an intercreditor agreement and why they are required.
• Understand the nuances of how the structure and type of transaction can impact intercreditor drafting.
• Understand the risks of making assumptions when drafting intercreditor agreements.
• Understand the different treatment of creditors within an intercreditor structure and core rights and restrictions.

• Intercreditor agreement concepts can be difficult to understand, which in turn can affect the ability to draft and negotiate intercreditor agreements confidently and effectively. By examining the commercial structure of intercreditor agreements and how they affect underlying cash flows, this course provides the foundations and understanding that are essential to being able to approach these agreements effectively in practice.
• Our intercreditor agreements course examines some of the key pitfalls in approaching intercreditor agreements in one session that would ordinarily take months or years of experience to acquire.
• Our trainer has years of hands-on experience in dealing with both simple and complex intercreditor arrangements across a wide variety of finance disciplines, including leveraged finance deals, real estate finance, asset-based lending, receivables finance and restructuring work. Having trained and mentored numerous lawyers, he has a unique insight into the knowledge gaps and drafting problems encountered in practice when dealing with intercreditor agreements and how to remedy them.

Our intercreditor agreement course is primarily aimed at:

• Lawyers who are new to drafting English law-governed intercreditor agreements and wish to develop a solid understanding of intercreditor agreement principles.
• Lawyers who need a refresher on intercreditor basics.
• Any lawyer who wants to improve their ability to understand and explain intercreditor mechanics in plain English (a skill that is of fundamental importance to all lawyers, particularly in an age where drafting is becoming more automated).
• Non-lawyers who are new to dealing with intercreditor arrangements and who wish to gain a foundational understanding of intercreditor concepts to help their interactions with lawyers.

Intercreditor agreements are an important ingredient in many financial transactions.

Whilst intercreditor agreement templates including the Loan Market Association’s intercreditor agreements can provide a useful starting point for drafting, in practice, they often need to be adapted to accommodate particular deal structures and address underlying commercial risks.

This means that for the inexperienced, approaching intercreditor agreements can feel daunting and be fraught with danger.

Furthermore, failing to understand intercreditor agreement concepts from a commercial perspective can lead to difficulties when approaching drafting or reviewing intercreditor agreements, which can lead to drafting mistakes and important commercial considerations being overlooked.

Our intercreditor agreements training course has been designed to provide a solid foundational understanding of intercreditor principles from a commercial perspective. It will help develop the skills and understanding of those involved in drafting or reviewing intercreditor agreements.