An intercreditor agreement is an agreement amongst the lenders of a project company on priority of repayment, priority on liquidation and interests in security.
The terms may include:
• appointment of a single trustee to hold debt and security for the benefit of all creditors;
• common terms that apply to all creditors;
• pro rata drawdowns;
• disbursement of payments pro rate or in agreed hierarchy out of proceeds account;
• management and monitoring by a single agent (conduit pipe for payments, voting and administration;
• limitation of creditor powers to vary their credit agreements (for exchange changes in financial terms);
• voting powers for waivers and consents;
• voting powers for default acceleration and security enforcement;
• notification of defaults known to agents of groups of creditors
• no action without specified creditor approvals; and
• sharing of recoveries pro rata or in prescribed hierarchy.