What is “in one name” turns out that there is a lot. Although there are no specific rules on the terms of a specific agreement on priorities, the name of the agreement may indicate quite clearly the nature of the agreement and the provisions it contains. Don`t forget to read the fine print. An interest rate letter (sometimes called an “Estoppel letter”) or a similar agreement is not necessarily an agreement that affects the priority of payments or guarantees, although it affects warranty fees. In an interest rate letter, a secured creditor acknowledges that he has no interest in the security of certain security or that his interest in security is limited to specific security. This differs from a subordination agreement by the fact that the lender handing out the letter withdraws or limits any interest in collateral rather than maintaining a subordinate security interest. However, for the secured creditor who receives the letter of interest, the effect is the same as a subordination agreement. The recipient secured creditor may invoke the interest rate ban letter to assert its priority over the guarantees on the secured creditor who grants the letter.  Pari passu means “at the same rate” or (generally) “equal.” The other terminology, sometimes used to describe the equitable distribution of payments or revenue between secured creditors, is “proportional” or “proportionate.” The meaning of these terms may vary depending on their definition in the agreement and how they are used in the context. With regard to payments, creditors are free to agree among themselves who will be paid and when. With respect to security interests, the Personal Property Security Act (the “Law”) contains complex priority rules that prioritize competing security interests and the same security.
However, creditors can enter into agreements to confirm or change the priority that their security interests would have under the law. As a general rule, these agreements can and may also cover priority payments. Agreements come under different names, such as subordination agreements, priority agreements or inter-1cond agreements. Of course, there are no fixed rules, which is what any type of agreement does, but there are typical terms in each agreement that differ from those of the other agreements. This article discusses the different types of agreements that deal with priority issues, the typical concepts they have and the differences between them.  There may be another arrangement for payments to the subordinated creditor, such as .B admission of certain “eligible payments” defined for him, as long as the debtor is not late with the priority creditor.