Subordinated Promissory Note Template for Australia

The Subordinated Promissory Note is commonly used in Australian business transactions where parties seek to document debt obligations that are intentionally ranked below other senior debts in priority of payment. This instrument is particularly useful in corporate financing scenarios, including inter-company loans, mezzanine financing, or restructuring situations. The document captures essential terms such as principal amount, interest rate, payment schedule, and critically, the subordination provisions that define its relationship with senior debt. It must comply with Australian legislative requirements, particularly the Corporations Act 2001 (Cth) and relevant financial services regulations. The note's subordinated nature makes it particularly suitable for situations where existing senior debt covenants need to be respected while securing additional financing.

1. Parties: Identification of the Maker (debtor) and the Holder (creditor) of the note

2. Background: Context of the debt obligation and relationship between parties

3. Definitions: Key terms used throughout the note, including 'Senior Debt', 'Subordinated Debt', and other relevant financial and legal terms

4. Promise to Pay: Core obligation stating the principal amount, interest rate, and payment terms

5. Subordination Terms: Detailed provisions regarding the subordination of this debt to senior debt, including payment restrictions and standstill provisions

6. Interest: Interest calculation method, rate, payment frequency, and any adjustment mechanisms

7. Repayment Terms: Schedule and methods of repayment, including any installment provisions or bullet payment requirements

8. Events of Default: Circumstances constituting default and consequences thereof

9. Representations and Warranties: Standard assertions about legal capacity, authority, and enforceability

10. Governing Law: Specification of Australian law as governing law and jurisdiction for disputes