Intercreditor Agreement Template for Ireland

When multiple creditors finance the same borrower, an Intercreditor Agreement becomes essential to prevent conflicts and establish clear legal priorities. This document creates a binding framework that governs how different classes of creditors—from senior banks to mezzanine lenders to bondholders—interact with each other and the borrower's security package.

When do you need this document?

You need an Intercreditor Agreement when structuring any financing arrangement involving multiple creditor groups with different risk profiles and return expectations. This commonly occurs in leveraged buyouts where senior debt, mezzanine financing, and shareholder loans all contribute to the transaction. Project finance deals also require these agreements when commercial banks, development finance institutions, and export credit agencies participate together. Real estate developments often involve senior construction lenders, mezzanine providers, and preference share investors who need coordinated rights. Corporate refinancings frequently require intercreditor arrangements when existing debt holders must work alongside new lenders, and acquisition financings typically need these agreements when multiple funding sources support the purchase price and working capital requirements.

Key legal considerations

The payment waterfall provisions form the heart of any intercreditor arrangement, dictating how cash flows to different creditor classes during normal operations and enforcement scenarios. Subordination clauses must clearly establish which debts rank ahead of others, including turnover provisions requiring junior creditors to pass payments to senior lenders until certain conditions are met. Enforcement restrictions prevent junior creditors from taking independent action that could prejudice senior lenders' recovery rights. Security sharing arrangements ensure all creditors benefit from the same collateral package while respecting the established priority ranking. Standstill provisions typically prevent junior creditors from accelerating their debt or enforcing security for specified periods, allowing senior creditors to pursue remedies first. The agreement must also address permitted acquisitions of debt by creditors, restrictions on amendments to underlying credit agreements, and procedures for releasing security interests.

Legal requirements in Ireland

Under Irish law, intercreditor agreements must comply with the Companies Act 2014's security registration requirements, ensuring all relevant charges are properly filed with the Companies Registration Office within 21 days of creation. The European Communities (Financial Collateral Arrangements) Regulations 2010 provide specific enforcement rights for financial collateral that may override general insolvency law, but only for qualifying arrangements between eligible parties. Irish courts recognize contractual subordination arrangements as valid and enforceable, provided they comply with insolvency law principles under the Companies Act 2014. The Personal Insolvency Act 2012 may affect personal guarantees supporting the debt structure, particularly regarding personal insolvency arrangements. For arrangements involving EU banks, the European Union (Bank Recovery and Resolution) Regulations 2015 can impact creditor rights during resolution proceedings. Security interests over Irish real estate must comply with the Land and Conveyancing Law Reform Act 2009, while the agreement should address how enforcement proceeds will be distributed in accordance with both contractual subordination terms and statutory priorities in insolvency.