Document background
An Intercreditor Agreement is essential in complex financing arrangements involving multiple creditors in Saudi Arabia. This document is typically used when there are different classes of creditors (such as senior lenders, junior lenders, and Islamic finance providers) extending financing to the same borrower or group of borrowers. The agreement must comply with Shariah principles and Saudi Arabian law, including the Commercial Courts Law, Banking Control Law, and Commercial Pledge Law. It establishes the hierarchy of creditor claims, regulates the relationships between creditors, sets out security sharing arrangements, and provides mechanisms for enforcement actions. The document is particularly important in project financings, syndicated facilities, and restructurings where multiple creditors need clarity on their respective rights and obligations. It includes provisions for payment priorities, security enforcement, voting rights, and standstill periods, all structured to be enforceable under Saudi Arabian law.
