hard · Private Credit & Debt
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 is entitled to receive PIK interest but all cash interest payments are blocked.
- The mezzanine lender can accelerate their debt but cannot take enforcement action against the collateral.
- The mezzanine lender can immediately file for a Section 363 sale to protect their recovery value.
- The mezzanine lender has the right to 'prime' the senior lender by providing DIP financing.
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