Surety Intercreditor Agreement

The interbank agreement plays a central role in the right to pledge. It is therefore essential that both lenders establish a solid foundation for their rights and priorities in the event of a borrower`s financial capacity failure and late payment. In the absence of such a document, each party can make its own decisions and be inconsistent. The whole trial can be unethical and uneconomic and can quickly turn into a legal disorder in court. In many inter-credit agreements, it is often common for the chief lender to dictate the terms of the pledge. However, in cases where a junior lender is not trading hard, the senior lender may disadvantage a junior lender. In some cases, a junior lender may face artificial delays on the part of the primary lender to seek authorization to enter into an agreement or right. Such an approach can thwart the process and force the junior lender to capitulate. Scott M. KOLBRENNER is Managing Director of Houlihan Lokey in Los Angeles, CA, where he leads Engineering and Construction Practice. Recent operations include financing, restructuring, strategic advice, fair market value, ESOP and credit reporting. Scott is a frequent speaker at industry events, including cfma, AICPA, ABC, AGC, Engineering News-Record, McGraw-Hill Construction and many others.

Recently, he was awarded by Investment Dealers` Digest as the holder of the Forty Under Forty Award. Scott has acquired a BA in Psychology from the University of Colorado at Boulder and a JD from Harvard Law School.Phone: 310-712-6524E-Mail: skolbrenner@hl.comWebsite: www.hl.comRICK CIULLO is Chief Operating Officer of Chubb Surety in Warren, NJ, where he leads Chubb`s global bonding business. Rick earned a BA in Economics and History from Wesleyan University in Middletown, CT. He also continues his training through Vistage, a global organization dedicated to training and development at the management level. Phone: 908-903-5555E-Mail: rciullo@chubb.comWebsite: www.chubb.comDAVID L. SAUERMAN is General Manager of the Construction and Engineering Division of PrivateBank in Chicago, IL. At 31 years old in the banking industry, Dave has worked exclusively in construction and engineering for 27 years. Dave is a member of the CFMA chapter in Chicago and is the author of CFMA Building Profits, currently Vice Chair of the Publications Committee and a regular presenter of CFMA events. He is also a member of the ASA, the Illinois Road and Transportation Builders Association and the construction committee of the Illinois CPA Society.Phone: 312-564-1237E-Mail: dsauerman@theprivatebank.comWebsite: www.theprivatebank.comClick here to download a PDF of this article.

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