medium · Debt Capital Markets
A Second-Lien lender is often referred to as being 'Silent'.
In the context of an intercreditor agreement, what does this 'silence' typically mean?
- The Second-Lien lender cannot vote on any amendments to the credit agreement that do not affect the collateral.
- The Second-Lien lender agrees to waive its right to take enforcement actions against the collateral for a set period (standstill) while the First-Lien lender acts.
- The Second-Lien lender's interest payments are not disclosed in the company's public financial statements.
- The Second-Lien lender is prohibited from attending any meetings with the company's management or board.
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