HomeCase studiesProviding advice on an intercreditor agreement to enable new business funding

Why the client needed our help

Our client, a receivables financier, was asked by an existing customer for its consent to the company obtaining a secured loan from another financier.

The terms of the all asset security granted to our client provided that the company was prohibited from borrowing more money or granting any further security over any of its assets to another party without our client’s consent. Without the additional funding that was being offered the company would face significant financial challenges.

Our client wished to enable its customer to continue trading without compromising its own ability to recover the sums it was due to it from the company.

How we helped

We carefully reviewed the terms of the proposed loan facility and advised our client on how those terms could potentially conflict with the provisions of their finance and security documents with the company.

We then negotiated the necessary amendments to the new lender’s agreement with the company’s solicitors so that its terms would be acceptable to our client. We also prepared an intercreditor agreement between our client and the new lender in which our client consented to the creation of additional security rights over the company’s assets in favour of the new financier.  The agreement also set out the order of priority of payments in favour of our client and the respective rights of enforcement of the security held by each financier.

The outcome

Our pragmatic and flexible solution meant that our client was able to support the continued business operation of its customer, without prejudicing our client’s position as the first ranking secured creditor.

Key contacts

Chris Willison

Chris Willison

Partner

Sally Bradshaw

Sally Bradshaw

Senior Associate

Kieran Cummins

Kieran Cummins

Solicitor

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