Transcap’s Transaction Subordination Agreement, sometimes referred to as an inter-creditor agreement, is an agreement between the lender, the client and Transcap.  It is a short agreement, usually about four pages long.  Its primary purpose is to document the relationships of the three parties.

As a lender, you are generally making advances that are secured by all or part of the client’s assets, including accounts receivable.  You have declined to provide financing for some transactions, and the client has asked Transcap for financial assistance to complete those transactions, which we will now call the Transcap Transactions.  Before Transcap will provide financial assistance, Transcap will require a security senior interest in the Transcap Transaction assets.

Transcap prefers that you continue to make advances against all accounts receivable, including the accounts receivable generated by Transcap Transactions.  The agreement states that it is in your sole discretion to decide to make the advance.  If you decide that you will advance against an account receivable from a Transcap Transaction, Transcap requires that the advance be sent to Transcap, and is in an amount sufficient to pay the financing provided for the Transcap Transaction.  Transcap will then subordinate the Transcap Transaction back to the lender.

Transcap has signed agreements with many banks, asset based lenders and factors.  Give us a call, and we’ll create one for you!