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An Intercreditor Agreement sets out the rights and priorities between different lenders who have provided loans to the same borrower. When multiple banks or financial institutions in New Zealand lend money to a business, this agreement helps prevent disputes by clearly establishing who gets paid first if things go wrong.

The agreement typically covers key aspects like payment rankings, security interests, and enforcement rights. For example, senior lenders usually have first claim on the borrower's assets, while subordinated lenders agree to wait their turn. Under NZ's Personal Property Securities Act, these arrangements help create certainty for all parties and streamline the recovery process if the borrower defaults.

Use an Intercreditor Agreement when multiple lenders are financing the same business project or borrower in New Zealand. This becomes especially important for complex financing arrangements, like when a company needs both a primary bank loan and additional funding from other financial institutions or private lenders.

The timing is crucial - put this agreement in place before finalizing any multi-lender financing. It's particularly valuable when dealing with secured loans, where lenders need clarity about their rights to the borrower's assets. Many NZ businesses use these agreements during expansion projects, property developments, or when restructuring existing debt with multiple creditors.

• Bilateral Intercreditor Agreements coordinate between two lenders, typically a senior and junior lender, setting clear payment priorities and enforcement rights
• Multi-Party Agreements manage relationships between three or more lenders, common in syndicated loans or complex project financing
• Senior-Mezzanine Agreements specifically address the relationship between traditional bank lenders and mezzanine finance providers
• First Lien-Second Lien Agreements focus on secured creditors with different ranking security interests over the same assets
• Subordination Agreements primarily deal with debt ranking and payment waterfalls between senior and subordinated debt

• Primary Lenders: Usually major banks or financial institutions who provide the main source of financing and typically hold first-ranking security
• Secondary Lenders: Additional financiers like investment funds or specialist lenders who provide supplementary funding
• Corporate Borrowers: The businesses receiving multiple loans, often large companies or property developers needing diverse funding sources
• Legal Counsel: Lawyers specializing in banking and finance who draft and negotiate the agreements for all parties
• Security Trustees: Independent parties who hold and manage security interests on behalf of multiple lenders

• Loan Details: Gather information about all existing and proposed loans, including amounts, interest rates, and security arrangements
• Lender Information: Collect full legal names and contact details of all participating lenders, plus their security interests under the PPSA
• Payment Terms: Document the agreed payment priorities, waterfall arrangements, and default procedures
• Security Details: List all assets serving as collateral and their respective rankings among lenders
• Enforcement Rights: Clearly outline each lender's rights to take action in default scenarios, including standstill periods
• Signing Authority: Confirm who has authority to execute the agreement for each party involved

• Party Identification: Full legal names and roles of all lenders, borrowers, and security trustees
• Debt Details: Clear definition of senior and subordinated debt obligations, including amounts and terms
• Payment Priorities: Specific waterfall provisions detailing payment order and distribution rules
• Security Interests: Comprehensive listing of secured assets and their rankings under PPSA requirements
• Enforcement Rights: Detailed procedures for exercising rights, including standstill periods and vote requirements
• Governing Law: Explicit statement that New Zealand law governs the agreement
• Amendment Process: Clear procedures for modifying agreement terms with required consents

An Intercreditor Agreement differs significantly from an Asset Purchase Agreement, though both often appear in complex business transactions. While Intercreditor Agreements manage relationships between multiple lenders, Asset Purchase Agreements govern the sale and transfer of specific business assets.

• Purpose: Intercreditor Agreements establish lender priorities and rights, while Asset Purchase Agreements detail the terms of asset transfers between buyer and seller
• Parties Involved: Intercreditor Agreements work between multiple lenders and a borrower; Asset Purchase Agreements operate between a buyer and seller
• Legal Focus: Intercreditor Agreements concentrate on debt ranking and security interests; Asset Purchase Agreements cover ownership transfer, warranties, and asset conditions
• Timing: Intercreditor Agreements remain active throughout the loan term; Asset Purchase Agreements typically conclude once the sale completes