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Intercreditor And Subordination Agreement

Intercreditor And Subordination Agreement Template for India

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Intercreditor And Subordination Agreement

"Need to draft an Intercreditor and Subordination Agreement for a renewable energy project in Gujarat, India, involving three senior lenders (two domestic banks and one international bank), two mezzanine lenders, and export credit agency financing, with project completion expected by March 2025."

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Document background
The Intercreditor And Subordination Agreement is essential in complex financing structures where multiple lenders provide different types of debt to a single borrower or group of borrowers in India. This document becomes crucial in scenarios involving syndicated loans, project financing, or corporate debt restructuring, where different classes of creditors need to establish their respective rights and priorities. It ensures compliance with Indian banking regulations and corporate laws while providing a clear framework for creditor rights, payment hierarchies, and enforcement procedures. The agreement typically addresses key aspects such as debt subordination, payment waterfalls, enforcement standstills, and security sharing arrangements, all within the context of Indian legal requirements and market practices.
Suggested Sections

1. Parties: Identifies all creditors (senior and subordinated), the borrower, and any security trustees or agents

2. Background: Describes the existing credit facilities, purpose of the agreement, and current security arrangements

3. Definitions and Interpretation: Defines key terms including Senior Debt, Subordinated Debt, Enforcement Action, and other crucial concepts

4. Ranking and Priorities: Establishes the hierarchy of debts and security interests between creditors

5. Payment Provisions: Sets out permitted payments to various creditor classes and payment restrictions

6. Turnover of Receipts: Procedures for handling payments received in violation of the agreement

7. Enforcement and Standstill: Rules governing enforcement actions and standstill periods

8. Application of Proceeds: Order of application of enforcement proceeds and other recoveries

9. Security and Guarantees: Provisions regarding sharing of security and guarantee rights

10. Default and Acceleration: Procedures following an event of default and acceleration rights

11. Information Sharing: Requirements for sharing information between creditors

12. Changes to the Parties: Transfer and assignment provisions, accession mechanics

13. Notices: Communication procedures between parties

14. Miscellaneous: Standard boilerplate provisions including amendments, waivers, severability

15. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes

Optional Sections

1. Purchase Option: Grants certain creditors the right to purchase other creditors' debt - used in complex multi-creditor scenarios

2. Hedging Liabilities: Required when hedging arrangements are part of the credit structure to establish their ranking

3. New Money Provisions: Used when anticipating future funding needs and establishing their ranking

4. Subordinated Creditor Representative: Needed when multiple subordinated creditors appoint a representative

5. Restructuring Provisions: Detailed provisions for managing debt restructuring - used in higher-risk transactions

6. Common Security Trustee: Required when appointing a security trustee to hold security for multiple creditors

7. Payment Blockage Provisions: Detailed provisions for blocking payments - used in complex subordination structures

8. Inter-Party Arrangements: Special arrangements between specific creditor groups - used in syndicated facilities

Suggested Schedules

1. Creditor Details: List of all creditors, their commitments, and contact details

2. Existing Facilities: Details of all existing credit facilities and their key terms

3. Security Documents: List and details of all security documents

4. Form of Accession Deed: Standard form for new parties joining the agreement

5. Form of Resignation Letter: Template for creditors exiting the arrangement

6. Payment Conditions: Detailed conditions for permitted payments to various creditor classes

7. Security Sharing Terms: Detailed terms for sharing and enforcing security interests

8. Notice Details: Comprehensive contact information for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Acceleration Event
Accession Deed
Agent
Approved Currency
Borrower Group
Common Security
Creditor Representative
Default
Distressed Disposal
Discharge Date
Enforcement Action
Enforcement Event
Event of Default
Facility Agreement
Finance Documents
Financial Indebtedness
Hedge Counterparty
Insolvency Event
Intercreditor Agent
Liabilities
Majority Lenders
Mezzanine Debt
Obligors
Payment Blockage Notice
Permitted Payments
Primary Creditors
Priority of Payments
Proceeds
Qualifying Senior Creditor
Receiver
Recoveries
Secured Obligations
Secured Parties
Security
Security Documents
Security Property
Security Provider
Senior Creditors
Senior Debt
Senior Discharge Date
Senior Facility Agreement
Standstill Period
Subordinated Creditors
Subordinated Debt
Subordination
Transaction Security
Trust Property
Trustee
Turnover Proceeds
Clauses
Ranking and Priority
Payment Subordination
Turnover
Payment Blockage
Standstill
Enforcement
Security Sharing
Information Rights
Amendments and Waivers
Assignment and Transfer
Accession
Debt Purchase
Payment Mechanics
Set-off
Notices
Calculations and Allocations
Costs and Expenses
Indemnities
Evidence and Calculations
Severability
Remedies and Waivers
Counterparts
Governing Law
Dispute Resolution
Confidentiality
Default Interest
Representations
Undertakings
Events of Default
Security Trust
Agency Provisions
Guarantee
Boilerplate
Relevant Industries

Banking & Financial Services

Infrastructure & Construction

Real Estate

Manufacturing

Energy & Power

Telecommunications

Healthcare

Mining & Metals

Technology

Transportation & Logistics

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Corporate Finance

Compliance

Banking

Loan Administration

Project Finance

Restructuring

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Treasury Manager

Credit Risk Manager

Loan Officer

Restructuring Officer

Corporate Finance Manager

Investment Banking Director

Compliance Officer

Senior Finance Manager

Project Finance Manager

Debt Restructuring Specialist

Banking Relationship Manager

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India. Essential for ensuring the intercreditor agreement meets basic contractual requirements and is legally binding.
The Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Governs the recovery of debts due to banks and financial institutions, relevant for enforcement of creditor rights under the intercreditor arrangement.
Insolvency and Bankruptcy Code, 2016: Critical legislation governing insolvency resolution process and creditor rights during bankruptcy. Affects how intercreditor arrangements are treated during insolvency proceedings.
The Companies Act, 2013: Regulates corporate affairs and includes provisions regarding charges, registration requirements, and corporate borrowing powers.
The Registration Act, 1908: Relevant for registration requirements of certain types of security interests and documentation that may be part of the intercreditor arrangement.
The Transfer of Property Act, 1882: Governs the transfer of property rights and security interests, relevant for secured lending aspects of the intercreditor arrangement.
Banking Regulation Act, 1949: Regulates banking operations in India and includes provisions affecting how banks can participate in intercreditor arrangements.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act): Provides framework for security enforcement and asset reconstruction, relevant for secured creditors' rights under the intercreditor arrangement.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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