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LBO: Lien Subordination and Intercreditor Agreement


Abstract

A subordination agreement is a legal agreement used to make the claim of one party junior to a claim in favor of another. It is typically used to grant first lien status to a lienholder who would otherwise be secondary to another party.

An intercreditor agreement is an agreement among creditors who have shared interests in a particular borrower. The agreement contains aspects of the creditors relationship to each other and to the borrower so that, in the event that a problem emerges, there will be ground rules in place to handle the situation. The specifics of an intercreditor agreement vary depending on the borrower, the type of debt, and other factors, such as the presence of cosigners.