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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Thursday, May 9, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will discuss critical issues involved in drafting and negotiating standstill provisions of intercreditor agreements from the perspective of both senior and junior lienholders. Topics the program will address include, among others, the scope, nature, duration, and commencement of the standstill, post-termination of the standstill, notice to senior lienholder, and reinstatement or reset of the standstill period.

Faculty

Katherine E. Bell
Partner, Corporate Department
Paul Hastings, LLP

Ms. Bell's practice focuses on commercial and corporate finance transactions. She regularly represents commercial banks, investment banks, finance companies, other lenders, and borrowers in working capital facilities (cash flow and asset-based), acquisition financings, structured financings, and other leveraged finance transactions including leveraged buyouts, restructurings, and recapitalizations. She has significant experience negotiating intercreditor relationships, including 1st Lien/2nd Lien transactions, split collateral arrangements, and unitranche “A/B” transactions.

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Jennifer B. Hildebrandt
Partner, Corporate Department
Paul Hastings, LLP

Ms. Hildebrandt is a partner in the Global Finance Group of Paul Hastings and head of the Los Angeles Corporate Department. She represents banks and other lenders in commercial finance matters (including asset-based loans and cash flow loans), restructurings, workouts, and special situation lending. Ms. Hildebrandt has extensive experience in multi-tranche and multi-lien transactions. In particular, she has extensive experience representing lenders in two lien deals, split collateral deals and first-out / last-out unitranche transactions. In addition, she has experience in various business sectors including healthcare, software, retail, insurance, media, franchise, restaurants, casinos, manufacturing, and vehicle and airline transportation, and in cross-border transactions.

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Description

One of the key points of negotiation in an intercreditor agreement is the scope of the "standstill" or "remedies block." The provisions prohibit a lender with a junior security interest from exercising its rights and remedies against the collateral. In contrast, the lender with a senior security interest has the exclusive right to determine the exercise of rights and remedies against the collateral. In the context of lien subordination, the standstill period generally focuses on restricting the junior lienholder's actions against the collateral.

At the same time, an intercreditor agreement that only deals with lien subordination often expressly allows a junior lienholder to file a proof of claim, take steps to preserve their lien, vote on a plan of reorganization, and other actions, even during the standstill period. Thus, ultimately, the rights of the junior lienholder will be heavily dependent on the language of the intercreditor agreement.

Listen as our authoritative panel of finance attorneys examines key standstill provisions of intercreditor agreements, including scope, nature, duration, the commencement of the standstill, post-termination of the standstill, notice to first-lien lender, and reinstatement or reset of the standstill period. The program will discuss the topics from the perspectives of both first and second lienholders.

Outline

  1. Overview
    1. The "enforcement priority"
    2. First lien lender perspective
    3. Second lien lender perspective
  2. Scope and nature of the standstill
    1. Lien subordination vs. debt subordination
    2. Permitted actions by second lien lender
    3. Exercise of rights of second lien lender as an unsecured creditor
  3. Key standstill provisions/negotiating points
    1. Duration
    2. Commencement
    3. What happens when the standstill period ends?
    4. Applicability of turnover provision
    5. Notice to the first-lien lender of intent to exercise remedies
    6. Scope of "back-end" standstill
    7. Reinstatement/reset of the standstill period
    8. Right of a senior creditor to take over remedies

Benefits

The panel will review these and other key issues:

  • The scope and length of standstill periods from the perspective of senior and junior lienholders and the basis for making such determinations
  • Actions that junior lienholders may take during the standstill period
  • Recent court interpretation of intercreditor agreements concerning rights and remedies of junior lienholders
  • Split collateral structures where the working capital lender has a first lien on the working capital assets and a second lien on the remainder of the collateral and where the term lender has a second lien on the working capital assets and a first lien on the remainder of the collateral
  • Standstills in the context of a "unitranche" structure