Inter Lender Agreement Template for Australia

An Inter Lender Agreement is a critical legal document that governs the relationship between multiple lenders participating in complex financing arrangements. This agreement establishes the framework for coordination, priority, and enforcement procedures when different classes of lenders provide various types of debt to the same borrower or group of borrowers.

When do you need this document?

You need an Inter Lender Agreement when multiple lenders are involved in financing the same borrower with different types or tranches of debt. This commonly occurs in syndicated loan facilities where senior lenders, mezzanine lenders, and other financial institutions participate with varying risk profiles and recovery priorities. The document is essential in project finance transactions where infrastructure finance providers, bond holders, and hedge counterparties need coordinated arrangements. You'll also require this agreement in leveraged buyout transactions where senior debt, subordinated debt, and equity bridge facilities operate alongside each other.

Key legal considerations

The agreement must clearly establish the ranking and priority of different debt classes, ensuring senior lenders maintain their preferred position while subordinated lenders understand their recovery limitations. Payment waterfall provisions are crucial, dictating how cash flows and enforcement proceeds are distributed among different lender classes. The document should address voting and consent mechanisms, particularly for amendments to underlying facility agreements and security enforcement decisions. Standstill provisions prevent junior lenders from enforcing their security or accelerating their debt without senior lender consent. Information sharing protocols ensure all lenders receive appropriate updates while maintaining confidentiality requirements. The agreement must also cover circumstances that trigger cross-default provisions and establish clear procedures for enforcement coordination.

Legal requirements in Australia

Under Australian law, Inter Lender Agreements must comply with the Personal Property Securities Act 2009 (Cth), particularly regarding the registration and priority of security interests. The agreement must ensure that security interests are properly registered on the Personal Property Securities Register to maintain their priority positions. Compliance with the Corporations Act 2001 (Cth) is essential for corporate lending arrangements, including proper corporate authority and security creation procedures. The Banking Act 1959 (Cth) may impose additional requirements where banking institutions are involved as lenders. If any underlying loans have consumer credit elements, the National Consumer Credit Protection Act 2009 (Cth) responsible lending obligations must be considered. The agreement should address Australian law governing clauses and jurisdiction provisions to ensure enforceability in Australian courts.