Anti-Layering Covenant

Definition:

A Covenant that in the context of Senior Debt and Subordinated Debt is given to the subordinated creditor (analogously in the context of loan notes given to the investors) and prohibits the issuer from “layering” in any debt that ranks between the Senior Debt and the Subordinated Debt.

Such a provision is uncommon in the United Kingdom but a similar outcome is reached through the provisions of the Intercreditor Agreement, the Credit Agreement, and various statutory security registration requirements.

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