Intercreditor Deed Template for Canada

An Intercreditor Deed is a comprehensive legal agreement that governs the relationships between multiple creditors in complex financing structures. When your business involves senior debt, subordinated debt, mezzanine financing, or other multi-tiered lending arrangements, this document establishes clear priorities and prevents conflicts between different creditor groups. The deed creates a binding framework that protects all parties' interests while ensuring orderly enforcement and payment procedures.

When do you need this document?

You need an Intercreditor Deed when your financing structure involves multiple lenders with different priority levels. This includes leveraged buyouts where senior banks, mezzanine lenders, and bondholders all participate in the same transaction. Infrastructure projects often require these agreements when combining senior debt, subordinated debt, and government financing. Real estate developments frequently use intercreditor arrangements when involving construction lenders, permanent lenders, and mezzanine capital. You also need this document when refinancing existing multi-creditor structures or when adding new debt layers to existing financing arrangements.

Key legal considerations

The ranking and priority provisions form the core of any intercreditor deed, establishing which creditors get paid first during enforcement or insolvency proceedings. Payment waterfall clauses regulate when and how much each creditor class can receive, often requiring senior debt to be paid down to certain levels before junior creditors receive payments. Standstill provisions prevent junior creditors from enforcing their security independently, requiring coordination with senior creditors. Enforcement procedures must be carefully structured to preserve security interests while allowing for efficient realization of assets. The agreement should also address permitted payments, refinancing rights, and amendment procedures that protect all creditor classes fairly.

Legal requirements in Canada

Canadian intercreditor deeds must comply with provincial Personal Property Security Act (PPSA) legislation, which governs the creation, perfection, and priority of security interests in personal property. Banks taking security must also consider Bank Act requirements, which provide specific rights and procedures for federally regulated financial institutions. The agreement must account for potential insolvency proceedings under the Bankruptcy and Insolvency Act (BIA) or Companies' Creditors Arrangement Act (CCAA), ensuring that priority arrangements remain enforceable during restructuring processes. Quebec-based transactions require additional consideration of Civil Code provisions that differ from common law security concepts. The deed should also address cross-default provisions, permitted dispositions, and voting arrangements that comply with applicable corporate and securities laws in each relevant Canadian jurisdiction.