Conflicts between facilities and intercreditor agreements

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By Gemma Bruin and Alice Hamilton

A recent case has highlighted the problems that can arise when a complex set of finance documents recording the respective rights and priorities of a group of lenders is amended. In this case, it was argued that certain amendments to a senior facilities agreement (SFA) conflicted with subordination and priority rights regulated by a related intercreditor agreement (ICA). That gave rise to an argument over what level of lender consent was needed to change some provisions of the SFA.

The debtor, Truvo, was facing financial difficulties due to competition from online search engines that were threatening its business of the publication of printed directories.

The Truvo Group was forced to file Chapter 11 Voluntary Petitions in the US Bankruptcy Court on 1 July 2010. Detailed financial negotiations to develop a restructuring plan followed, in order to allow these companies to exit the Chapter 11 proceedings…

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