Standstill Provisions In Intercreditor Agreements

The duration of the standstill period is usually negotiated, as younger, priority creditors have competing interests. As a general rule, the recreated creditor will prefer a shorter standstill period, as it will endeavour to initiate co-enforcement measures in the event of late payment. However, the priority creditor will generally prefer a longer standstill period, which will give it more time to implement its own collateral implementation strategy. While the duration of the shutdown varies, most are between 90 and 180 days. Several factors are specific to the circumstances of each transaction and can influence the length of the standstill period, including: subordination and intercreditor agreements can take many forms depending on the nature of the transaction. Priority lenders, who are forced to tackle problematic loans with borrowers and other subordinated creditors, should verify and understand the extent of the lock-in or standstill periods provided for in their subsedation agreements at an early stage of the formation process. If a priority lender takes action without verifying the subhesity or existing interconnection agreement, the lender may either breach the agreement and possibly create additional problems with the borrower and/or subordinated creditor, or disregard the conditions precedent required in the document in order to protect and preserve the rights and priority of the priority lender. As regards guarantees, their nature should be taken into account; especially if it is perishable or if it could quickly lose its value and how liquid and easy it is to market. .