The Subordinated Lenders have agreed to subordinate the right of payments of the Subordinated Debt of a Borrower to a Senior Debt. The Lender enters into the Deed as Senior Creditor.

The Subordinated Lenders have agreed that, subject to the terms and conditions of this Deed, the Subordinated Debt shall be subordinated in right of payment to the Senior Debt and are entering into this Deed in connection with the Finance Documents.

The Board of Directors of each Subordinated Lender is satisfied that entering into this Deed is for the purposes and to the benefit of that Subordinated Lender and its business.

The Lender, the Subordinated Lenders and the Borrower intend this document to take effect as a deed (even though the Lender only executes it under hand).

Each Subordinated Lender hereby irrevocably covenants in favour of the Lender that the Subordinated Debt shall be subordinated and subject in right of payment to the prior payment in full of all Senior Debt and accordingly the Lender shall be entitled to receive payment in full of the Senior Debt before such Subordinated Lender shall be entitled to receive any payment on account of the Subordinated Debt or any part of it.

Each Subordinated Lender and the Borrower undertake that, notwithstanding anything to the contrary contained in any Subordinated Finance Document, the Subordinated Debt shall not be due or payable or capable of becoming or being declared due or payable until the Senior Debt Discharge Date.

How to use this Document?

This is a standard subordination deed to change or regulate an arrangement between two creditors that are owed debts by a common debtor, under which one creditor agrees to defer payment of its debt in favour of the debt of another creditor. This is in favour to Lender/senior creditor.

Details should be included. This should include Interpretation, Subordination, Undertakings of Borrower, Undertaking of Subordinated Lenders, Permitted Payments, Turnover of non-permitted Payments, Subordination on insolvency, Treatment of Distributions, Enforcement of Subordinated Lenders, Voting, Consent, Representations and Warranties, Information, Protection of subordination, NO RIGHTS IN FAVOUR OF SUBORDINATED LENDERS OR BORROWER, ORDER OF DISTRIBUTIONS, Power of attorney, Changes to the parties, Expenses, Stamp Duty and Interest, Other Indemnities, Set-off, rights, service of processes, Counterparts. 

If either party wishes to amend the agreement in the future, both parties should agree to do so, and the original agreement and amendments should be recorded in writing and signed by both parties.