Contents
- Defining Intercreditor and Subordination Terms in Deal
Negotiations
- Amendment to New York's Power of Attorney Law
Defining Intercreditor and Subordination Terms in Deal
Negotiations
By Gary B. Rosenbaum
The overheated debt markets from 2003 to 2007 resulted in a
record volume of buyout transactions by financial sponsors. The
proliferation of second lien debt provided by hedge funds, private
equity funds and other nontraditional investment vehicles like
collateralized loan obligations satisfied the demand for leveraged
debt created by these acquisitions. In contrast to traditional
mezzanine indebtedness, second lien debt was less expensive and did
not dilute the sponsor's equity ownership. In the current
post-credit freeze era, second lien financing is disappearing, and
mezzanine and other subordinated debt options are reemerging to
fill the gap between senior loans and equity with a wide range of
intercreditor and subordination terms. This
