Intercreditor Terms Between 1st- And 2nd-Lien Lenders

Law360, New York (June 23, 2010, 11:17 AM EDT) -- "First lien" and "second lien" financing structures developed over recent years have allowed borrowers to increase leverage and allowed lenders to expand their investment options in the secured debt markets.

These layered-lien financing structures depend on intercreditor agreements between the first-lien lenders and the second-lien lenders to establish the relative priorities and rights of the two tiers of debt. In turn, these intercreditor agreements rely upon Section 510(a) of the Bankruptcy Code[1] to ensure that the rights of the first-lien lenders will be respected in a...
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