Document background
The Letter of Subordination of Debts is commonly used in Singapore when companies have multiple creditors and need to establish clear payment priorities. This document is particularly relevant in financing arrangements where new debt is being introduced or existing debt relationships need restructuring. It sets out detailed terms of subordination, including payment restrictions, turnover provisions, and procedures during insolvency. Under Singapore law, such letters are crucial instruments in debt structuring and are often required by senior lenders as a condition of providing financing. The document typically includes specific references to Singapore legislation, particularly the Companies Act and the Insolvency, Restructuring and Dissolution Act 2018.
