Intercreditor Agreement Template for New Zealand

An intercreditor agreement is a critical legal document that establishes the hierarchy of claims and enforcement rights among multiple creditors in complex financing structures. Under New Zealand law, this agreement ensures that all parties understand their relative positions and obligations when multiple debt facilities are provided to the same borrower or group of companies.

When do you need this document?

You need an intercreditor agreement when your financing structure involves multiple creditor groups with different risk profiles and security positions. This commonly occurs in syndicated lending where senior banks, mezzanine lenders, and bond holders participate in the same transaction. Project finance deals typically require these agreements to coordinate between construction lenders, term lenders, and working capital facilities. Leveraged buyouts and acquisition financing also necessitate intercreditor agreements to manage relationships between senior debt, subordinated debt, and shareholder loans. Private equity transactions often involve complex creditor structures requiring clear subordination and standstill provisions.

Key legal considerations

The ranking and priority provisions are fundamental, establishing which creditors get paid first during enforcement or insolvency proceedings. Payment subordination clauses determine when junior creditors can receive payments and when payment blocks apply during default situations. Enforcement provisions specify which creditors can take action against security and when standstill periods apply to subordinated creditors. Voting rights and consent requirements establish how creditors participate in workout negotiations and restructuring decisions. Security sharing arrangements ensure proper distribution of enforcement proceeds according to the agreed waterfall. Permitted payments clauses allow certain routine payments to continue even during restricted periods, maintaining business operations while protecting senior creditor interests.

Legal requirements in New Zealand

New Zealand intercreditor agreements must comply with the Personal Property Securities Act 1999 (PPSA), which governs security interest registration and priority rules. Under the PPSA, properly registered security interests generally rank according to registration time, but intercreditor agreements can modify these priorities through subordination arrangements. The Companies Act 1993 requires compliance with company charge registration requirements and director duties when granting security. The Property Law Act 2007 applies to real property security arrangements and may affect land-based security sharing provisions. Insolvency Act 2006 provisions can override certain contractual arrangements during formal insolvency proceedings, so agreements must account for statutory priorities. The Receiverships Act 1993 governs receiver appointments and powers, requiring careful drafting of enforcement provisions to ensure effectiveness during receivership scenarios.