Bank Subordination Agreement Template for India

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Key Requirements PROMPT example:

Bank Subordination Agreement

"Need a Bank Subordination Agreement for a manufacturing company with three existing senior lenders (total facility INR 500 crore) and two subordinated lenders (total INR 200 crore), including provisions for potential additional subordinated creditors joining by March 2025."

Document background
The Bank Subordination Agreement is essential in structured financing arrangements where multiple lenders provide debt to a single borrower at different levels of priority. This document becomes particularly important in the Indian context where complex financing structures are increasingly common in corporate lending. The agreement is used when a company has both senior and junior debt, ensuring that junior lenders' rights to payment and enforcement are subordinated to those of senior lenders. It must comply with Indian banking regulations and typically includes detailed provisions on payment waterfall, enforcement restrictions, and turnover obligations. The Bank Subordination Agreement is crucial for risk management and is often required by senior lenders as a condition precedent to providing financing.
Suggested Sections

1. Parties: Identifies all parties to the agreement including the borrower, senior lender(s), and subordinated lender(s)

2. Background: Recitals explaining the existing lending arrangements, purpose of subordination, and context of the agreement

3. Definitions and Interpretation: Defines key terms including Senior Debt, Subordinated Debt, Enforcement Action, and other relevant terms

4. Subordination: Core provisions establishing the subordination of junior debt to senior debt

5. Undertakings by Subordinated Creditors: Commitments from subordinated creditors regarding their claims and actions

6. Payment Restrictions: Restrictions on payments to subordinated creditors and permitted payments

7. Turnover of Receipts: Obligations to turn over any unauthorized payments received by subordinated creditors

8. Enforcement Restrictions: Limitations on enforcement actions by subordinated creditors

9. Application of Proceeds: Order of application of proceeds from enforcement or insolvency

10. Power of Attorney: Appointment of senior creditor as attorney for subordinated creditor in certain circumstances

11. Changes to Parties: Provisions governing transfers and assignments

12. Miscellaneous: Standard boilerplate provisions including notices, amendments, governing law

13. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes

Optional Sections

1. Subordinated Creditor Committee: Required when there are multiple subordinated creditors to coordinate their actions

2. Security Provisions: Needed when specific security interests are involved and require subordination

3. Intercreditor Provisions: Required when there are multiple classes of creditors requiring detailed intercreditor arrangements

4. Standstill Provisions: Additional detailed provisions regarding creditor standstill periods, if required

5. Restructuring Provisions: Needed when agreement contemplates potential debt restructuring scenarios

6. Additional Subordinated Creditor Accession: Required when new subordinated creditors may join the agreement later

7. Representations and Warranties: Additional representations may be needed for complex lending structures

Suggested Schedules

1. Schedule 1 - Form of Accession Deed: Standard form for new parties to accede to the agreement

2. Schedule 2 - Details of Senior Facilities: Detailed list and terms of all senior debt facilities

3. Schedule 3 - Details of Subordinated Debt: Detailed list and terms of all subordinated debt instruments

4. Schedule 4 - Notice Details: Contact details and notice requirements for all parties

5. Schedule 5 - Security Documents: List of all relevant security documents (if applicable)

6. Appendix A - Form of Payment Turnover Notice: Standard form for notification of turnover requirements

7. Appendix B - Form of Subordination Notice: Standard form for subordination notifications to relevant parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Relevant Industries

Banking

Financial Services

Corporate Lending

Investment Banking

Infrastructure

Real Estate

Manufacturing

Healthcare

Retail

Technology

Telecommunications

Energy

Relevant Teams

Legal

Finance

Treasury

Risk Management

Corporate Finance

Credit

Compliance

Banking Operations

Deal Advisory

Transaction Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Banking Relationship Manager

Credit Risk Manager

Corporate Finance Manager

Debt Finance Manager

Restructuring Officer

Company Secretary

Financial Controller

Senior Loan Officer

Syndication Manager

Transaction Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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