The Deed of Subordination of Directors Loan is commonly used in Irish corporate financing arrangements when directors have provided loans to their company and there is a need to formally establish the priority of different debts. This typically occurs when a company is seeking additional financing from banks or other creditors who require assurance that their loans will take priority over existing directors' loans. The deed details the terms of subordination, including when payments can be made on the subordinated debt, what happens in case of company insolvency, and how the arrangement affects the rights of all parties involved. It's particularly important in scenarios where companies are restructuring their debt, seeking new investment, or managing financial difficulties. The document must comply with Irish company law requirements, particularly the Companies Act 2014, and needs to be properly executed as a deed to be effective.
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1. Parties: Identification of the Company, the Director(s) providing the loan(s), and any Senior Creditors
2. Background: Recitals explaining the existing loan arrangements and the purpose of subordination
3. Definitions and Interpretation: Definitions of key terms including Senior Debt, Subordinated Debt, Enforcement Action, etc.
4. Subordination: Core provisions establishing the subordination of the Director's loan to other specified debts
5. Undertakings by the Director: Director's commitments regarding the subordinated debt, including restrictions on enforcement and assignment
6. Permitted Payments: Circumstances under which payments on the subordinated debt may be made
7. Turnover of Receipts: Obligations to pay over any unauthorized receipts to senior creditors
8. Protection of Subordination: Provisions ensuring the subordination remains effective in insolvency or similar events
9. Duration: Period of effectiveness and conditions for termination of the subordination
10. Representations and Warranties: Standard confirmations about authority, enforceability, and no conflicts
11. Further Assurance: Obligations to take additional actions if needed to give effect to the subordination
12. Governing Law and Jurisdiction: Confirmation of Irish law governance and jurisdiction
13. Execution Page: Formal execution blocks meeting Irish deed requirements
1. Senior Creditor Rights: Additional provisions when there are specific senior creditors who are party to the deed
2. Payment Conditions: Specific conditions for permitted payments, used when there are particular financial metrics or tests
3. Multiple Directors Provisions: Additional provisions when multiple directors have loans being subordinated
4. Security Provisions: Provisions dealing with any security held for the subordinated debt
5. Amendments to Subordinated Debt: Restrictions on amendments to the subordinated debt terms
6. Assignment and Transfer: Detailed provisions on permitted transfers, used when transferability is a concern
1. Schedule 1 - Form of Deed of Accession: Template for additional parties to accede to the deed
2. Schedule 2 - Details of Subordinated Debt: Specific details of the loan(s) being subordinated including amounts, dates, and terms
3. Schedule 3 - Form of Subordinated Debt Document: Template or copy of the subordinated loan agreement
4. Schedule 4 - Notice Requirements: Details of how notices should be given under the deed
5. Appendix 1 - Companies Registration Office Forms: Any required CRO forms for filing in Ireland
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