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An Intercreditor Agreement sets out the rights and priorities between different lenders who have provided loans to the same borrower. When multiple banks or financiers lend money to an Australian company, this agreement helps prevent disputes by clearly establishing who gets paid first if things go wrong.

The agreement covers key issues like payment order, security sharing, and enforcement rights. For example, it might specify that a major bank gets repaid before other lenders, or outline when secondary lenders can take action against a defaulting borrower. Under Australian law, these agreements are particularly important in corporate restructuring and insolvency situations, helping create certainty for all parties involved.

You need an Intercreditor Agreement when multiple lenders are providing finance to your business at different levels of priority. This commonly occurs during syndicated loans, refinancing arrangements, or when taking on additional debt through subordinated lending in Australia.

The agreement becomes essential before finalizing any multi-lender financing deal, especially when mixing senior bank debt with mezzanine finance or private lending. It's particularly crucial in sectors like property development, infrastructure projects, and corporate acquisitions where complex funding structures are common. Getting this agreement in place early prevents costly disputes and provides clarity for all parties about their rights and obligations.

• First Ranking: Used between senior lenders and borrowers, typically involving major banks. These agreements establish primary payment rights and control over secured assets.
• Second Ranking: Common in mezzanine finance arrangements, defining the relationship between senior and junior debt providers.
• Multi-Tiered: Manages complex financing structures with three or more levels of debt, often seen in large infrastructure projects.
• Bilateral: Simpler agreements between just two lenders, common in corporate refinancing situations.
• Project-Specific: Tailored for construction or development projects, addressing unique requirements like progress payments and completion guarantees.

• Senior Lenders: Usually major banks or financial institutions that provide the primary loan and hold first-ranking security over the borrower's assets
• Junior Lenders: Secondary financiers like mezzanine funds or private credit providers who accept subordinated payment rights
• Corporate Borrowers: Australian companies receiving multiple layers of debt financing who must comply with the agreement's terms
• Legal Counsel: Banking and finance lawyers who draft and negotiate the agreements, ensuring all parties' interests are protected
• Security Trustees: Entities appointed to hold and manage security interests on behalf of multiple lenders

• Loan Details: Gather all facility agreements, including loan amounts, interest rates, and security arrangements for each lender
• Priority Structure: Document the agreed payment rankings and security priorities between all lenders
• Enforcement Rights: Define each lender's ability to take action against the borrower and any standstill periods
• Security Information: List all security interests, their registration details on the PPSR, and which assets they cover
• Borrower Profile: Collect corporate details, financial statements, and existing debt obligations
• Consent Requirements: Identify what actions need unanimous lender approval versus majority consent

• Parties and Definitions: Clear identification of all lenders, borrowers, and key terms used throughout the agreement
• Priority Rankings: Detailed hierarchy of payment rights and security interests between different classes of lenders
• Enforcement Provisions: Rules around when and how each lender can take action against the borrower
• Payment Waterfall: Specific order of distributing proceeds from enforcement or insolvency
• Standstill Provisions: Periods during which junior lenders cannot take enforcement action
• Amendment Rules: Process for modifying the agreement and required consent levels
• Governing Law: Explicit statement that Australian law applies and jurisdiction details

An Intercreditor Agreement differs significantly from a Consortium Agreement, though both deal with multiple parties working together financially. While an Intercreditor Agreement manages relationships between different lenders to the same borrower, a Consortium Agreement coordinates multiple parties working together on a joint venture or project.

• Purpose and Scope: Intercreditor Agreements focus on establishing payment priorities and enforcement rights among lenders. Consortium Agreements instead outline how partners will collaborate, share resources, and split profits.
• Party Relationships: In Intercreditor Agreements, parties have distinct hierarchical positions (senior vs. junior lenders). Consortium members typically operate as equals with shared objectives.
• Risk Management: Intercreditor Agreements protect lenders' interests in default scenarios. Consortium Agreements focus on operational risks and project delivery.
• Duration: Intercreditor Agreements usually last until all debt is repaid, while Consortium Agreements often align with specific project timelines.