Bite Size: Getting to Grips with Key Intercreditor Agreement Concepts

• 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.
• The 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 and 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.

• 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.
• Understand the structure and main commercial aspects of an intercreditor agreement.
• 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.

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

• What’s the purpose of an intercreditor agreement?
• How does an intercreditor agreement deal with pre-enforcement cash flows?
• How does an intercreditor agreement deal with post-enforcement cash flows?

Who needs to be a party to an intercreditor agreement?

• Day one parties
• The different seams of creditors
• Post day one parties

Approaching drafting

• Practical lessons
• What’s often overlooked?
• What are you assuming?

Understanding the main commercial aspects of any intercreditor agreement

• The difference between the ranking of liabilities and the ranking of security
• The difference between subordination and postponement
• 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
• Understanding ‘enforcement action’
• Control of claims
• How do recoveries of monies get applied?
• Dealing with changes
• Cross-border considerations

Other commercial considerations

• Leveraged finance transaction considerations
• Real estate finance transaction considerations
• Receivables finance transaction considerations
• Multiple intercreditor agreements – when and why?
• Approaching other transaction structures

The 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, pension trustees, regulators, guarantors and private individuals on a wide range of complex UK and international cross-border banking and finance matters on transactions with individual values of in excess of £2 billion. These have included global loans, investment grade lending, leveraged finance acquisitions, real estate investment & development finance, asset and receivables finance, bridge finance, private wealth finance, project finance, securitisations, social housing finance, trade finance, higher education finance, intragroup lending, netting and cash pooling arrangements and general corporate lending transactions including cross border syndicated and club deals. He has also advised on directors’ issues, restructurings and complex multi-layered intercreditor arrangements.

The trainer completed his formal training and qualified as a banking & finance solicitor in Leeds at Cobbetts LLP in 2005, before moving to London in 2007 to continue his career at Denton Wilde Sapte LLP (now Dentons) and subsequently with Wragge & Co LLP (now Gowling WLG (UK) LLP).

He moved to an in-house counsel role at Barclays Bank PLC in 2010, working 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 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.

In 2015, he returned to Gowling WLG (UK) LLP, to become a professional support lawyer in their banking & finance team, responsible for education & training, knowhow, implementation of legal technology and providing cross-jurisdictional advice on complex areas of law. He has also written and delivered training for several professional associations including the Loan Market Association and the American Intellectual Property Law Association (AIPLA).

Having worked both in private practice and in-house with leadership, sales, relationship, risk, compliance, legal, transaction management, operations and product teams, the trainer 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 students with the essential foundations, commercial awareness and approaches to thinking which are necessary to achieve this.

The trainer sits on an advisory board for a major legal publisher and advisory panel for a leading international banking and finance journal. He has also sat on the legal & technical committee for ABFA (now UK Finance).

He has also participated in a number of 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 participated in several UK Government legislative consultations.

As a mentor, he has also worked on the law firm panel at Barclays Eagle Labs Legal Tech Hub, London providing help and support to a wide range of new start-up legal-tech businesses from the UK and overseas.

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.

This course has been designed to provide a solid foundational understanding of intercreditor principles from a commercial perspective, to help those involved in drafting or reviewing intercreditor agreements to develop the skills and understanding which are critical when approaching intercreditor agreements.