Intercreditor Agreement Template for Pakistan

The Intercreditor Agreement is a crucial document in complex financing arrangements where multiple creditors provide funding to a single borrower or group of borrowers in Pakistan. It becomes necessary when there are different classes of debt (such as senior, mezzanine, and junior debt) or multiple security interests over the same assets. The agreement must comply with Pakistani legislation including the Contract Act 1872, Banking Companies Ordinance 1962, and relevant Islamic banking regulations. It typically includes provisions for ranking of debt, payment waterfalls, enforcement procedures, standstill periods, and voting rights among creditors. The document is particularly important in project finance, syndicated lending, and corporate restructuring scenarios where multiple creditors need to coordinate their actions and protect their respective interests.

1. Parties: Identifies all creditors, security agents, and other relevant parties to the agreement

2. Background: Outlines the context of the financing arrangements and purpose of the intercreditor agreement

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles for the agreement

4. Ranking and Priorities: Establishes the ranking of debt and priority of payments between creditors

5. Payment Provisions: Details the waterfall of payments and payment mechanics between creditors

6. Security and Guarantees: Addresses the sharing and enforcement of security interests and guarantees

7. Enforcement and Standstill: Sets out enforcement rights and standstill periods for different creditor classes

8. Application of Proceeds: Specifies how proceeds from enforcement or recoveries will be distributed

9. Purchase Options: Details any rights of creditors to purchase other creditors' debt

10. New Debt and Additional Parties: Procedures for adding new debt facilities and additional creditors

11. Representations and Warranties: Standard representations and warranties from each creditor

12. Information Sharing: Requirements for sharing information between creditors

13. Decision Making: Procedures for collective decision-making among creditors

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, governing law

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