It should be noted that the agreement or pact between creditors is denounced in certain situations, such as the direct intervention of the Reserve Bank of India. An intercreditor agreement (or inter-creditor agreement) is a contract between two other creditors. Such an agreement comes into effect when the borrower has two (or more) lenders. Lenders sign a contract between them specifying all the necessary points. The contract contains details such as dispute settlement, different deposit positions, creditors` responsibilities, individual creditor commitments, impact on other creditors, etc. Junior lenders should exercise caution when evaluating an intercredit file before participating. One way to achieve this goal is to negotiate a fair edge and develop achievable plans. However, if efforts to set such conditions are unsuccessful, it is advisable that the junior lender waive the agreement or seek other options. But in the event of a senior/junior lender case, the lenders enter into an inter-creditor agreement. Such an agreement helps them define their respective rights. If an original ICA is made up of 3 main creditors who are paid two principal creditors, can an inter-signed agreement with the same final benefits be maintained, when there is only one primary creditor left? Adjust your preferences and receive a personalized story recommendation based on your interest. In addition, the primary lender may deliberately delay approval of the agreement, which may be up to the junior lender.
This could prove frustrating for the junior lender. The Inter-creditor agreement or ICA, which is the direct result of the resolution plan of sashakt or the government report on the bad bank, which was designed by the Sunil Mehta committee and will function as follows: in such a scenario, the government authority can serve as junior lender, the financier (e) as the main lender and the company (Y) is the borrower. Since the company provides credit to the two financiers with the same property, the senior creditor will in any event want to enter into an intercreditor agreement with the government authority in order to protect its interests. A junior lender should apply for exemption from a certain class of collateral that a priority lender has not included in its asset base.