Security Package & Loan Documentation
Intercreditor Agreements in Shipping
Summary
An intercreditor agreement defines rights, ranking, payment priorities and enforcement control among multiple creditors funding the same shipping business or assets.
Why this matters in ship finance
It is especially important when senior loans, mezzanine capital, leasing or hedging coexist.
The concept
Common arrangements allocate proceeds, impose standstill periods, regulate amendments and define turnover duties when subordinated creditors receive prohibited payments.
How it is used in practice
Build a claims waterfall showing secured amount, priority, hedging close-out, costs, distribution and likely recovery under multiple asset values.
Practical issues
Contractual ranking may be affected by statutory maritime liens, security perfection and insolvency law. Not all junior claims are subordinated in the same way.
How ShipFinance.ai uses this concept
Model capital-stack and distribution effects under normal repayment, restructure and enforcement.
Key takeaways
- Ranking is contractual and statutory
- Enforcement control can be separate from nominal priority
- Recovery depends on the actual waterfall