As discussed before in this column, the growth in mezzanine and junior financing has spawned a rise in litigation over lien intercreditor agreements—agreements between creditors that govern their relative rights and remedies with respect to shared collateral.
These often intensely negotiated, and sometimes poorly drafted, documents have continued to confound courts, motivating such professional groups as the American Bar Association to encourage the market towards more standardized terms.1 The migration of intercreditor arrangements from “silent seconds” heavily favoring first lienholders to a more complex balancing of rights and obligations between creditor groups has also placed greater pressure on document drafters.
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