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Collateral Sharing Agreement for Canada

Collateral Sharing Agreement Template for Canada

A Canadian law-governed agreement that establishes the terms and conditions under which multiple secured creditors share their security interests in common collateral. The document details the ranking of security interests, enforcement procedures, distribution of proceeds, and decision-making mechanisms among secured parties. It ensures coordinated action in enforcement scenarios and provides clarity on creditors' respective rights and obligations under Canadian federal and provincial laws, including the Personal Property Security Act (PPSA) and, where applicable, the Civil Code of Quebec.

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Collateral Sharing Agreement

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What is a Collateral Sharing Agreement?

This document is essential in complex financing arrangements where multiple creditors hold security interests in the same collateral. A Collateral Sharing Agreement becomes necessary when different lenders or financial institutions provide financing to the same borrower and need to establish their respective rights and priorities in the shared collateral. The agreement operates within the Canadian legal framework, considering both federal and provincial legislation, particularly the Personal Property Security Act in common law provinces and the Civil Code in Quebec. It typically includes detailed provisions on enforcement procedures, voting rights, distribution of proceeds, and the appointment of a collateral agent. This type of agreement is particularly crucial in syndicated lending, project finance, and other multi-creditor arrangements to prevent conflicts and ensure orderly enforcement of security interests.

What sections should be included in a Collateral Sharing Agreement?

1. Parties: Identifies all secured parties entering into the agreement and the debtor(s)

2. Background: Explains the context of the security arrangements and why a sharing agreement is needed

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules for the agreement

4. Sharing and Ranking of Security: Core provisions establishing how security interests will be shared and ranked among parties

5. Application of Proceeds: Details how proceeds from enforcement or realization will be distributed among secured parties

6. Enforcement and Decision Making: Procedures for making decisions about enforcement actions and required majority thresholds

7. Appointment of Collateral Agent: Provisions regarding appointment, powers, and duties of the collateral agent

8. Payments and Distributions: Mechanics for handling payments and distributing proceeds among secured parties

9. Representations and Warranties: Standard representations by each party regarding authority and enforceability

10. Costs and Expenses: Allocation of costs related to enforcement and administration of shared security

11. Amendments and Waivers: Procedures for modifying the agreement and effects of waivers

12. Term and Termination: Duration of the agreement and circumstances for termination

13. Notices: Communication procedures between parties

14. General Provisions: Standard boilerplate provisions including governing law, jurisdiction, etc.

What sections are optional to include in a Collateral Sharing Agreement?

1. Future Secured Parties: Procedures for adding new secured parties to the agreement - include when future financing is contemplated

2. Intercreditor Provisions: Detailed provisions governing relationships between different classes of creditors - include when there are different priority levels

3. Special Asset Provisions: Specific provisions for particular types of collateral (e.g., real estate, intellectual property) - include when such assets are part of security

4. Bankruptcy/Insolvency Provisions: Special provisions governing rights in bankruptcy - include for complex multi-creditor arrangements

5. Quebec Security Provisions: Special provisions for Quebec security interests - include if any collateral or parties are in Quebec

6. Currency Provisions: Provisions handling multiple currencies - include for cross-border arrangements

7. Subordination Provisions: Detailed subordination terms - include when certain debt is to be subordinated

8. Purchase Option: Rights of parties to purchase others' interests - include when requested by major creditors

What schedules should be included in a Collateral Sharing Agreement?

1. Schedule A - Secured Parties: List of all secured parties and their commitment amounts/percentages

2. Schedule B - Security Documents: Comprehensive list of all security documents subject to the sharing arrangement

3. Schedule C - Shared Collateral: Detailed description of all collateral subject to the sharing arrangement

4. Schedule D - Form of Accession Agreement: Standard form for adding new secured parties to the agreement

5. Schedule E - Notice Details: Contact information and notice details for all parties

6. Schedule F - Decision Making Procedures: Detailed procedures for secured party voting and decision making

7. Schedule G - Distribution Waterfall: Detailed order of priority for distributing enforcement proceeds

8. Schedule H - Agent Fee Schedule: Fee structure for the collateral agent if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions





























































Clauses



































Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing

Energy & Resources

Infrastructure

Technology

Transportation & Logistics

Healthcare

Telecommunications

Agriculture & Forestry

Relevant Teams

Legal

Finance

Treasury

Risk Management

Credit

Compliance

Corporate Secretariat

Investment Banking

Loan Administration

Transaction Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Corporate Lawyer

Risk Manager

Credit Manager

Compliance Officer

Security Trustee

Loan Officer

Investment Manager

Corporate Secretary

Managing Director

Relationship Manager

Transaction Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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