The Loan Subordination Agreement Template is essential for complex financing arrangements in Australia where multiple creditors are involved and a clear hierarchy of debt needs to be established. This template is specifically designed for use when there are senior and junior debt facilities, and the parties need to document their respective rights and priorities. The agreement covers crucial aspects such as payment waterfall provisions, enforcement restrictions, and creditor rights in default scenarios. It is particularly relevant in situations involving corporate refinancing, project finance, or restructuring where multiple layers of debt exist. The template incorporates requirements under Australian law, including the Personal Property Securities Act 2009 (Cth) and relevant banking regulations, making it suitable for both domestic and cross-border transactions involving Australian entities.
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1. Parties: Identifies all parties to the agreement including the Senior Creditor, Subordinated Creditor, and Debtor
2. Background: Recitals explaining the context of the existing debts and the purpose of the subordination arrangement
3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles
4. Subordination: Core provisions establishing the subordination of the junior debt to the senior debt
5. Priority of Payments: Specifies the order in which payments will be made and how proceeds will be distributed
6. Restrictions on Subordinated Debt: Details restrictions on payments, enforcement, and modifications of the subordinated debt
7. Undertakings: Commitments from all parties regarding their conduct during the term of the agreement
8. Events of Default: Specifies circumstances that constitute default and their consequences
9. Duration and Termination: Establishes how long the subordination remains in effect and circumstances for termination
10. Assignment and Transfer: Rules regarding the transfer of rights and obligations under the agreement
11. Notices: Procedures for formal communications between parties
12. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendments
1. Security Arrangements: Include when the subordination agreement involves secured debts, detailing the priority of security interests
2. Turnover Provisions: Include when requiring the subordinated creditor to turn over any prohibited payments to the senior creditor
3. Standstill Provisions: Include when requiring the subordinated creditor to refrain from taking enforcement action for a specified period
4. Intercreditor Provisions: Include when multiple creditors are involved beyond simple senior/subordinated relationship
5. Payment Blockage Provisions: Include when specific triggers can block payments to subordinated creditors
6. Refinancing Provisions: Include when contemplating future refinancing of the senior debt
7. Insolvency Provisions: Include detailed provisions for insolvency scenarios when dealing with corporate debtors
1. Schedule 1 - Details of Senior Debt: Detailed description of all senior debt facilities including amounts, terms, and security
2. Schedule 2 - Details of Subordinated Debt: Detailed description of all subordinated debt facilities including amounts, terms, and security
3. Schedule 3 - Form of Accession Deed: Template for additional parties to join the subordination arrangement
4. Schedule 4 - Payment Terms: Detailed payment waterfall and calculation mechanisms
5. Appendix A - Notice Details: Contact information and notice requirements for all parties
6. Appendix B - Existing Security Documents: List and details of any existing security documents affected by the subordination
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
Corporate Finance
Real Estate & Property
Infrastructure & Construction
Mining & Resources
Manufacturing & Industrial
Retail & Consumer
Healthcare & Medical
Technology & Communications
Agriculture & Agribusiness
Relevant Teams
Legal
Finance
Treasury
Risk Management
Credit
Corporate Banking
Debt Capital Markets
Special Situations
Restructuring
Commercial
Company Secretariat
Compliance
Relevant Roles
Chief Financial Officer
Finance Director
Legal Counsel
Corporate Lawyer
Banking & Finance Lawyer
Treasury Manager
Financial Controller
Risk Manager
Credit Manager
Restructuring Officer
Investment Manager
Debt Fund Manager
Commercial Director
Company Secretary
Loan Officer
Corporate Banking Manager
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