Subordinated Creditors Security Agreement Template for Indonesia

The Subordinated Creditors Security Agreement is essential in Indonesian financing transactions where multiple creditors hold different rankings of security interests over the same assets. It is typically used in project financing, corporate lending, and restructuring scenarios where there is a need to establish clear hierarchies between different classes of creditors. The document ensures compliance with Indonesian security laws, including Law No. 42 of 1999 on Fiduciary Security and related regulations, while providing mechanisms for security creation, perfection, and enforcement. It addresses specific Indonesian law requirements such as security registration, notarization requirements, and the use of Indonesian language versions where required. The agreement is particularly crucial in cross-border transactions where international lenders need to ensure their security interests are properly protected under Indonesian law.

1. Parties: Identifies all parties to the agreement including the debtor, senior creditors, subordinated creditors, and security agent

2. Background: Sets out the context of the security arrangement, existing facilities, and purpose of subordination

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles, including Indonesian law-specific concepts

4. Creation of Security: Details the security interests being created and the assets being secured

5. Subordination Terms: Establishes the hierarchy of claims and payment rights between senior and subordinated creditors

6. Turnover of Receipts: Provisions regarding the treatment of payments received in violation of subordination terms

7. Security Agent Provisions: Powers, duties, and protections of the security agent under Indonesian law

8. Registration and Perfection: Requirements for registration of security interests with relevant Indonesian authorities

9. Representations and Warranties: Standard and Indonesia-specific representations regarding authority, validity, and security

10. Covenants: Ongoing obligations of the parties regarding maintenance and preservation of security

11. Enforcement: Rights and procedures for enforcing security interests under Indonesian law

12. Application of Proceeds: Order of application of enforcement proceeds and payments

13. Release of Security: Conditions and process for releasing security interests

14. Changes to Parties: Transfer and assignment provisions

15. Notices: Communication requirements and methods

16. Miscellaneous: Standard boilerplate provisions adapted for Indonesian law

17. Governing Law and Jurisdiction: Confirmation of Indonesian law governance and jurisdiction