A Comparative Overview Of Transatlantic Intercreditor Agreements

In addition to the release provisions, European intercreditors with a second right of pledge generally allow the securities agent (subject to the fair sale provisions discussed above) to transfer subordinated pledge rights, intra-group liabilities and/or shareholder loans to buyers of assets in an executing position. The option of assigning liabilities could be more effective than the elimination of execution-related subordinated debt. However, the securities agent among the European intermediaries of the second right of pledge accepts the instructions of creditors who hold 662/3% of the sum of (i) the sums drawn and not used under the priority credit agreement and (ii) all liabilities actually in arrears (plus all marks at market value if the priority credit agreement has been respected) under guarantee agreements. The first right of pledge / second right of pledge in the United States strongly resembles the right of senior / second pledge in Europe; However, for the above reasons, the key terms of the United States are intercreditors for the second deposit right and the second European pledge right have been constructed on the basis of different assumptions, resulting in significant differences between lenders. On the other hand, the parties of the European inter-secretaries who have a second right of deposit usually contain a longer list of signatories. In addition to the first collateral representative and lenders, the second, lenders and debtors, debtor guarantors, lenders of collateral facilities, intra-group loan lenders, shareholder loan lenders and the security officer will execute an inter-creditor agreement on the European model. The longer list of parties to European intercreditors for second collateral rights is largely determined by the need for priority creditors to ensure that the group of borrowers is free and free from any claim (secured and unsecured) against the borrower and guarantors, after enforcement by priority lenders, as well as the desire to ensure that all enforcement actions taken by creditors are thus choreographed that recoveries are maximized for priority secured creditors (and thus indirectly for all creditors). It has become quite common for refinancings and additional debts to be allowed in European transactions. European intermediaries generally require that these debts be subject to the interconnection agreement, even if they are not covered (above a certain threshold and trading reserve). The first parties granted in the United States shall endeavour to ensure that the first secured parties have as much control as possible over the conduct of the Chapter 11 proceedings, by making second pledges, which assure the parties of their bankruptcy rights as secured creditors (and, in some cases, as unsecured creditors), who make second pledges in effective „seconds“ . .

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