Intercreditor Agreement Template for Germany

An Intercreditor Agreement sets the rules between multiple lenders who provide financing to the same borrower, common in German corporate lending structures. It establishes who gets paid first, how to handle collateral, and what happens if the borrower defaults - essentially creating a clear pecking order among creditors.

Under German banking law (Kreditwesengesetz), these agreements help coordinate complex financing arrangements, especially in syndicated loans and Schuldscheindarlehen. They're particularly important when dealing with senior banks, mezzanine lenders, and bondholders, as they prevent disputes and streamline debt recovery procedures if things go wrong.

Your company needs an Intercreditor Agreement when multiple lenders are involved in financing your business, especially in German corporate restructurings or large-scale project financing. This becomes crucial when mixing different types of debt - like combining traditional bank loans with mezzanine financing or when bringing in new lenders to an existing credit arrangement.

The timing is critical: put the agreement in place before finalizing any multi-lender financing deals. German insolvency law (Insolvenzordnung) makes these agreements particularly valuable for protecting creditor rights and establishing clear enforcement procedures. They're essential for complex financing structures involving both domestic and international lenders operating under German law.

• Senior-Subordinated Structure: Most common in German corporate financing, establishing clear payment priority between senior bank lenders and junior debt holders.
• Pari Passu Agreements: Used when multiple lenders share equal ranking, typical in syndicated loans under German banking practices.
• First-Second Lien Structure: Popular in secured financing deals, defining rights between primary and secondary security holders over the same collateral.
• Split Collateral Arrangements: Common in manufacturing sector deals, where different lenders have priority over specific asset categories.
• Project Finance Format: Tailored for large infrastructure projects, coordinating multiple debt tranches with complex security packages.

• Senior Lenders: Usually German commercial banks or lending institutions who hold first-ranking claims and initiate the Intercreditor Agreement
• Mezzanine Financiers: Investment funds or specialized lenders providing subordinated debt, often with conversion rights
• Legal Counsel: German banking lawyers who draft and negotiate terms, ensuring compliance with Kreditwesengesetz requirements
• Corporate Borrowers: The companies receiving multiple layers of financing, typically mid-sized to large German enterprises
• Security Trustees: Independent entities managing collateral on behalf of multiple creditors under German security arrangements

• Identify All Parties: Collect details of each lender, their debt amounts, and security interests under German law
• Payment Hierarchy: Document the agreed payment waterfall and enforcement rights among creditors
• Security Package: List all collateral, including German land charges (Grundschulden) and security assignments
• Enforcement Rules: Define standstill periods and voting rights for collective enforcement actions
• Local Requirements: Ensure compliance with German banking regulations and security agent provisions
• Documentation Review: Our platform generates precise, legally-sound agreements tailored to German law requirements

• Parties and Definitions: Clear identification of all creditors, borrowers, and security trustees under German law
• Ranking Provisions: Detailed payment priorities and subordination terms following German debt hierarchy rules
• Security Rights: Specific provisions for German security interests (Sicherungsrechte) and their enforcement
• Standstill Arrangements: Time periods and conditions for individual enforcement actions
• Voting Mechanisms: Decision-making procedures for collective creditor actions
• Governing Law: Express choice of German law and jurisdiction clauses
• Buy-out Rights: Terms for senior lenders to purchase junior debt

An Intercreditor Agreement differs significantly from a Consortium Agreement in German business law, though both involve multiple parties working together. While Intercreditor Agreements manage relationships between different classes of lenders, Consortium Agreements coordinate joint business ventures or research projects.

• Purpose and Scope: Intercreditor Agreements focus exclusively on debt priority and creditor rights, while Consortium Agreements cover broader operational collaboration and resource sharing
• Legal Framework: Intercreditor Agreements operate under German banking law (Kreditwesengesetz), whereas Consortium Agreements typically fall under general contract law and partnership provisions
• Party Relationships: Intercreditor Agreements establish hierarchical relationships between creditors, while Consortium Agreements create more collaborative, horizontal partnerships
• Enforcement Mechanisms: Intercreditor Agreements include specific provisions for debt recovery and security enforcement, while Consortium Agreements focus on project management and dispute resolution