Glossary

Standstill Agreement

Also known as: Standstill

An agreement — most often among multiple creditors in a layered capital stack, or between a lender and a guarantor — under which the parties agree to refrain from exercising specific remedies for a defined period while a broader workout is negotiated.

Where a forbearance agreement is typically bilateral between a borrower and its lender, a standstill is the term of art used among creditors themselves — for example, a senior lender and a mezzanine lender agreeing, often as an amendment layered on top of their existing intercreditor agreement, that neither will exercise UCC foreclosure, acceleration, or buy-sell rights for a set window while a global resolution is pursued. Standstills are also used directly with a guarantor, pausing a guaranty enforcement action while the underlying loan is restructured, so that guaranty litigation does not run on a separate, faster track than the primary workout. In a multi-tranche deal, getting every creditor layer to agree to a standstill simultaneously is often the hardest and most time-consuming part of a workout, since each class's incentives to hold out or press an advantage differ by where it sits in the capital stack.