medium · Private Credit documentation-covenants-terms
Under a standard Intercreditor Agreement (ICA), a mezzanine lender is subject to a 180-day 'standstill period' following a payment default on the senior debt.
Which of the following describes the mezzanine lender's rights during this period?
- The mezzanine lender may accrue PIK interest, though all scheduled cash interest is blocked in full.
- The mezzanine lender can accelerate their debt but cannot take enforcement action against the collateral.
- The mezzanine lender can immediately file a petition for a Section 363 sale to protect its recovery value.
- The mezzanine lender retains the contractual right to 'prime' the senior lender by directly providing DIP financing.
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