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Intercompany Subordination Agreement
"I need an Intercompany Subordination Agreement for our UAE-based holding company and its five operating subsidiaries, where the parent company's AED 50M loan needs to take priority over all existing intercompany loans between the subsidiaries."
1. Parties: Identification of all parties including the primary debtor(s), senior creditors, and subordinated creditors
2. Background: Context of the existing debts and reason for subordination arrangement
3. Definitions and Interpretation: Definitions of key terms including Senior Debt, Subordinated Debt, Enforcement Action, etc.
4. Subordination: Core provisions establishing the subordination of junior debt to senior debt
5. Turnover Provisions: Obligations to turn over any payments received in breach of subordination
6. Payment Restrictions: Restrictions on payments of subordinated debt
7. Enforcement Restrictions: Limitations on enforcement actions by subordinated creditors
8. Representations and Warranties: Standard representations including authority, binding obligations, and no conflicts
9. Amendments and Waivers: Provisions governing changes to the agreement
10. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes
1. Security Provisions: Required when shared security interests exist between senior and subordinated debt
2. Tier Rankings: Needed when there are multiple tiers of debt requiring different levels of subordination
3. Permitted Payments: Include when certain payments to subordinated creditors are allowed under specific conditions
4. Additional Creditor Accession: Include when new creditors may join the subordination arrangement in the future
5. Bankruptcy Specific Provisions: Detailed provisions for bankruptcy scenarios, particularly relevant for high-risk debtors
6. Information Rights: Include when subordinated creditors require specific information rights about the senior debt
1. Schedule 1 - Form of Accession Deed: Template for new parties to accede to the agreement
2. Schedule 2 - Senior Debt Details: List and details of all senior debt facilities and commitments
3. Schedule 3 - Subordinated Debt Details: List and details of all subordinated debt facilities and commitments
4. Schedule 4 - Notice Details: Contact information and notice requirements for all parties
5. Schedule 5 - Existing Security Interests: Details of any existing security interests affecting the subordination arrangement
6. Appendix A - Form of Payment Blockage Notice: Standard form for notifying of payment blockage events
Authors
Banking and Financial Services
Real Estate and Construction
Manufacturing
Energy and Resources
Technology and Telecommunications
Retail and Consumer Goods
Healthcare
Transportation and Logistics
Hospitality and Tourism
Industrial Conglomerates
Legal
Finance
Treasury
Risk Management
Compliance
Corporate Secretariat
Credit Control
Corporate Finance
Financial Planning and Analysis
Debt Management
Chief Financial Officer
Treasury Manager
Financial Controller
Legal Counsel
Corporate Secretary
Risk Manager
Credit Manager
Finance Director
General Counsel
Compliance Officer
Corporate Finance Manager
Group Financial Controller
Senior Legal Manager
Treasury Director
Debt Management Officer
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