Document background
A Subordination Letter is commonly used in Irish corporate and financing transactions where multiple creditors are involved and a clear hierarchy of debt needs to be established. This document becomes particularly relevant in scenarios involving new financing arrangements, debt restructuring, or when additional debt is being introduced to an existing corporate structure. The letter typically sets out the details of both the senior and junior debt, the terms of subordination, and any permitted payments or exceptions. Under Irish law, such subordination arrangements are commonly used alongside facility agreements, intercreditor agreements, and security documents to create a comprehensive financing structure. The Subordination Letter needs to comply with Irish corporate and insolvency laws, particularly regarding the registration of charges and the treatment of subordinated debt in insolvency scenarios. It's a crucial document for establishing clear creditor priorities and maintaining certainty in complex financing arrangements.
