Intercreditor Deed Template for United Arab Emirates

An Intercreditor Deed governed by UAE law is a complex legal document that establishes the relationship and respective rights between multiple creditors in a financing arrangement. It sets out the priority of payments, security enforcement rights, and procedures for handling defaults under UAE federal laws and regulations. The document must comply with both UAE Civil and Commercial Codes while considering Sharia principles, particularly in structures involving Islamic finance facilities. It details the ranking of debt, payment waterfalls, security sharing arrangements, and enforcement mechanisms, providing a comprehensive framework for creditor relationships in secured lending transactions.

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What is a Intercreditor Deed?

The Intercreditor Deed is essential in complex financing arrangements where multiple creditors hold different classes of debt or security interests in the UAE. This document becomes particularly relevant in project finance, syndicated lending, and structured finance transactions where various lenders have different priorities and rights. The deed must carefully navigate UAE legal requirements, including the UAE Civil Code, Commercial Code, and where applicable, Islamic finance principles. It typically includes detailed provisions on payment priorities, enforcement rights, security sharing, and creditor decision-making processes. The document is crucial for establishing clear procedures for handling defaults, enforcement actions, and distribution of proceeds, while ensuring compliance with UAE law and regulatory requirements. The Intercreditor Deed serves as the primary agreement governing relationships between different classes of creditors, including senior lenders, mezzanine lenders, and subordinated creditors.

What sections should be included in a Intercreditor Deed?

1. Parties: Identification of all creditors, security agent, facility agent(s), and obligors

2. Background: Description of the existing facilities, purpose of the intercreditor arrangement, and related security structure

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the deed and interpretation rules

4. Ranking and Priority: Establishes the ranking of debt and security between creditors

5. Payment Provisions: Rules governing the payment waterfall, sharing of payments, and turnover provisions

6. Effect of Insolvency Event: Provisions dealing with insolvency scenarios and creditors' rights during insolvency

7. Enforcement of Security: Procedures and rights regarding enforcement of security, including enforcement triggers and mechanics

8. Application of Proceeds: Order of application of proceeds from enforcement or recoveries

9. Security and Guarantees: Provisions regarding the holding and maintenance of security and guarantees

10. Changes to the Parties: Transfer and assignment provisions, including conditions for new creditors joining

11. Protection of Security Agent: Rights, protections, and indemnities for the Security Agent

12. Costs and Expenses: Allocation of costs and expenses among parties

13. Notices: Communication procedures and contact details

14. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction provisions

What sections are optional to include in a Intercreditor Deed?

1. Islamic Finance Provisions: Required when Islamic facilities are part of the financing structure, addressing Sharia compliance requirements

2. Hedging Liabilities: Include when hedging arrangements form part of the secured obligations

3. Subordinated Liabilities: Required when there are specifically subordinated creditors or shareholder loans

4. Purchase Option: Include when senior creditors wish to grant junior creditors the option to purchase their debt

5. Debt Trading Provisions: Detailed provisions for trading debt between creditors, if permitted

6. Security Trust Provisions: Required in structures involving trust arrangements (noting UAE law limitations)

7. Agreement Among Creditors: Specific provisions for creditor decision-making and voting rights

What schedules should be included in a Intercreditor Deed?

1. Form of Accession Deed: Standard form for new creditors to accede to the intercreditor deed

2. Form of Resignation Letter: Template for resigning parties

3. Security Documents: List and details of all security documents covered by the intercreditor arrangement

4. Notice Details: Contact details for all parties

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

6. Form of Security Agent Resignation Letter: Template for security agent resignation

7. Payment Waterfall: Detailed waterfall provisions and calculations

8. Hedging Arrangements: Details of any hedging arrangements if applicable

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

Cost

Free to use

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