Intercreditor agreement

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

An intercreditor agreement sets out how two or more lenders to the same borrower rank against each other and what each may do: who is repaid first, over which assets, who can enforce and when, and what either needs the other's consent for. It matters most when a bank and a second lender — a fund, a mezzanine lender, a vendor who has left money in the business — rely on one cash flow. A bank reads it as closely as its own facility letter, because it decides who controls the outcome if the business struggles.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.