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Abstract: 

Intercreditor agreements are fixtures of modern corporate finance transactions, yet the extent to which their provisions are enforceable in bankruptcy remains the subject of ongoing controversy. This article attempts to explain the persistence of such disputes. By examining three recurring issues that have animated many recent disputes over the enforceability of intercreditor agreements in bankruptcy: (1) ascertaining the scope of fundamental intercreditor terms, such as “common collateral,” “proceeds,” and “exercise of remedies”; (2) the degree to which junior creditors may waive their right to participate in bankruptcy proceedings of the relevant obligor; and (3) whether the Bankruptcy Code permits a bankruptcy court to confirm a “cram-down” plan that does not comport with an otherwise enforceable intercreditor agreement.

Keywords: 510(a) Lien Subordination Agreements; MPM Silicones L.L.P. (“Momentive”); Texas Competitive Electric Holdings Company LLC (“TCEH”); La Paloma Generating Company, LLC

Affiliations:  1: Skadden, Arps, Slate, Meagher & Flom LLP.