Intercreditor Arrangements In Fund Finance Transactions

It is an exciting time to be in the fund finance space. Sponsors continue to seek liquidity to fund investments, and banks and alternative lenders are thinking creatively about how to offer this additional leverage. There isn't just increased deal-making volume and transactions getting done, but the deals have interesting and novel features which borrow concepts that we see in other types of financing transactions.

Among what we are seeing is parties taking a second look at the value of the collateral package and getting comfortable with the idea of putting a second lien on that collateral. It isn't so long ago that second-lien loans were a form of distressed debt. Then they went mainstream and became a typical form of financing for companies seeking extra leverage while offering the lenders – which range from money center banks to hedge funds and private equity funds and other direct lenders – a nice return on their capital. It only makes sense that, given this