Intercreditor Agreement Template for Switzerland

An Intercreditor Agreement sets the ground rules between multiple lenders who have claims on the same borrower, especially common in Swiss syndicated lending and project finance deals. It clearly establishes who gets paid first, how to handle collateral, and what happens if the borrower defaults.

Under Swiss debt law, these agreements help prevent conflicts between senior and junior creditors by defining their rights and responsibilities upfront. They're particularly important in restructuring scenarios, where they guide decision-making powers and specify how different classes of lenders can act when a borrower faces financial difficulties. Swiss banks often require these agreements when multiple parties provide financing for large commercial projects.

Use an Intercreditor Agreement when multiple lenders provide financing to the same Swiss borrower, particularly in complex project finance or syndicated loan arrangements. It becomes essential when mixing different types of debt, like combining bank loans with bond financing or when some lenders have priority over others.

This agreement proves especially valuable during financial restructuring or when adding new lenders to existing financing arrangements. Swiss banks typically require it for transactions involving multiple creditors with different security interests or repayment priorities. It's particularly important when dealing with cross-border financing where different legal systems might affect creditor rights and remedies.

• Basic Bilateral: Coordinates two lenders with different security interests, common in Swiss real estate financing
• Multi-Tier: Manages three or more creditor classes with distinct payment priorities, typical in large corporate financing
• Project Finance: Structures complex relationships between construction lenders, equipment financiers, and working capital providers
• Mezzanine: Addresses specific rights between senior bank debt and subordinated mezzanine financing, popular in Swiss acquisition deals
• Restructuring: Focuses on special provisions for distressed situations, including standstill periods and voting rights

• Senior Lenders: Usually Swiss banks or financial institutions who have first-ranking security rights and priority in payment
• Junior Creditors: Subordinated lenders, mezzanine financiers, or bondholders who accept lower payment priority
• Borrower: The company receiving multiple layers of financing, though not a direct party to the Intercreditor Agreement
• Legal Counsel: Swiss law firms specializing in banking and finance who draft and negotiate terms
• Security Agent: Often a Swiss bank managing collateral and enforcing rights on behalf of all creditors

• Debt Structure: Document all existing and planned financing, including loan amounts, security interests, and payment priorities
• Lender Details: Gather full legal names, contact information, and authorization levels of all creditors involved
• Security Rights: List all collateral, guarantees, and security arrangements under Swiss law
• Default Procedures: Define enforcement rights, standstill periods, and voting mechanisms for key decisions
• Payment Terms: Outline the waterfall payment structure and permitted payments to each creditor class
• Documentation: Use our platform to generate a customized agreement that automatically includes all required Swiss legal provisions

• Party Definitions: Clear identification of all creditors, their roles, and hierarchy under Swiss law
• Payment Waterfall: Detailed order of payment priority and permitted distributions among creditors
• Security Rights: Provisions for shared collateral, enforcement procedures, and standstill periods
• Voting Mechanisms: Rules for decision-making, especially in default scenarios or amendments
• Buy-out Rights: Terms for senior creditors to purchase junior debt
• Governing Law: Explicit choice of Swiss law and jurisdiction
• Turnover Provisions: Rules for redistributing payments received outside the agreed waterfall

An Intercreditor Agreement differs significantly from a Credit Agreement in both scope and purpose. While both documents deal with lending relationships, they serve distinct functions in Swiss finance law.

• Primary Purpose: Intercreditor Agreements manage relationships between multiple lenders, while Credit Agreements focus on the direct relationship between a lender and borrower
• Party Structure: Intercreditor Agreements involve multiple creditors establishing priorities among themselves, whereas Credit Agreements typically involve just one lender and one borrower
• Legal Focus: Intercreditor Agreements concentrate on creditor rights, payment hierarchies, and enforcement procedures, while Credit Agreements detail loan terms, repayment schedules, and borrower obligations
• Timing: Credit Agreements are executed first, establishing the basic lending relationship, with Intercreditor Agreements following when multiple lenders become involved