Intercreditor Agreement Template for Indonesia

An Intercreditor Agreement sets the ground rules between multiple lenders who provide financing to the same borrower, especially common in Indonesian syndicated loans and project finance deals. It clearly defines each lender's rights, priorities, and how they'll handle important decisions like debt collection or restructuring.

Under Indonesian banking regulations, these agreements help prevent conflicts when different creditors have claims on the same assets. They're particularly vital in major infrastructure projects where international and local banks often team up, establishing who gets paid first if things go wrong and how collective decisions about the borrower must be made.

Consider implementing an Intercreditor Agreement when multiple lenders are financing the same Indonesian project or company, especially in infrastructure development, real estate ventures, or large corporate financing deals. This becomes crucial before finalizing any syndicated loan arrangements or when adding new lenders to an existing financing structure.

The agreement proves particularly valuable in complex projects involving both local Indonesian banks and international financiers, or when mixing different types of debt like secured and unsecured loans. It's essential to have this in place before the first disbursement of funds to avoid future disputes about payment priorities and decision-making rights.

• Basic Bilateral Intercreditor Agreement: Used when two lenders share equal ranking and need to coordinate their rights
• Senior-Subordinated Structure: Common in Indonesian project finance, establishing clear payment priorities between senior and junior lenders
• Multi-Tiered Agreement: Manages complex financing with multiple debt levels, typical in large infrastructure projects
• Syndicated Loan Intercreditor: Coordinates relationships among numerous banks in syndicated lending arrangements
• Security Sharing Agreement: Focuses specifically on how multiple creditors share security interests under Indonesian collateral law

• Lead Banks: Usually initiate and coordinate the Intercreditor Agreement, often taking the role of facility agent in syndicated loans
• Participating Lenders: Include both Indonesian and international banks, finance companies, and institutional investors who provide financing
• Legal Counsel: Indonesian law firms and in-house attorneys who draft and review the agreement's terms
• Borrower's Representatives: Though not direct parties, they often participate in negotiations to ensure terms align with their financing structure
• Security Agents: Manage shared collateral and enforce security rights on behalf of all creditors under Indonesian law

• Loan Details: Gather information about all existing and planned financing, including amounts, interest rates, and security arrangements
• Lender Information: Collect complete details of all participating creditors, their roles, and voting rights
• Security Structure: Document all collateral arrangements and confirm registration requirements under Indonesian law
• Payment Priorities: Establish clear payment waterfall and enforcement procedures among creditors
• Decision Mechanics: Define voting thresholds for key decisions and enforcement actions
• Compliance Check: Ensure alignment with Indonesian banking regulations and OJK requirements

• Parties Section: Full legal names and details of all creditors, security agents, and facility agents
• Payment Hierarchy: Clear waterfall structure defining payment priorities and sharing arrangements
• Voting Rights: Specific thresholds for decision-making and enforcement actions
• Enforcement Provisions: Detailed procedures for collective enforcement and standstill periods
• Security Sharing: Terms for sharing and managing collective security interests
• Governing Law: Express choice of Indonesian law and jurisdiction clauses
• Default Remedies: Specific actions permitted during borrower default scenarios

An Intercreditor Agreement differs significantly from an Bond Issuance Agreement, though both are crucial in Indonesian financing structures. While Intercreditor Agreements manage relationships between multiple lenders, Bond Issuance Agreements focus on the terms between a single bond issuer and its bondholders.

• Parties Involved: Intercreditor Agreements operate between multiple lenders, while Bond Issuance Agreements primarily involve one issuer and multiple bondholders
• Purpose: Intercreditor Agreements establish payment priorities and enforcement rights among creditors, whereas Bond Issuance Agreements set terms for debt securities
• Regulatory Framework: Bond Issuance Agreements must comply with OJK capital market regulations, while Intercreditor Agreements focus on banking and security enforcement rules
• Flexibility: Intercreditor Agreements can be modified with lender consent, but Bond Issuance terms typically require bondholder meetings for changes