The Subordinate Loan Agreement is essential in structured financing arrangements where multiple layers of debt exist. This document is typically used when a borrower requires additional financing while maintaining existing senior debt obligations. It establishes the subordinated nature of the loan, ranking it below senior debt in terms of payment priority and security rights. Under Indian law, these agreements must comply with specific regulatory requirements, including those set by the Reserve Bank of India and the Companies Act, 2013. The agreement is particularly relevant in corporate restructuring, project financing, or when companies need to raise additional capital without disturbing existing senior debt arrangements. It includes detailed provisions on payment restrictions, turnover obligations, and intercreditor relationships, ensuring proper alignment with Indian legal and regulatory frameworks.
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1. Parties: Identification of the borrower, subordinate lender(s), and senior lender(s)
2. Background: Context of the subordinate loan, relationship with senior debt, and purpose of the facility
3. Definitions and Interpretation: Definitions of key terms, interpretation rules, and references to other agreements
4. The Facility: Details of the subordinate loan amount, purpose, and drawdown conditions
5. Subordination Terms: Core provisions establishing the subordination mechanism, payment restrictions, and turnover provisions
6. Interest and Fees: Interest calculation, payment terms, and applicable fees
7. Repayment and Prepayment: Terms for scheduled repayments and voluntary/mandatory prepayments
8. Representations and Warranties: Standard and specific representations by the borrower
9. Information Covenants: Obligations to provide financial and other information
10. General Covenants: Positive and negative undertakings by the borrower
11. Events of Default: Circumstances constituting default and consequences
12. Changes to Parties: Transfer and assignment provisions
13. Administration: Payment mechanics, calculations, and notices
14. Governing Law and Jurisdiction: Choice of Indian law and jurisdiction provisions
1. Security: Required if the subordinate loan is secured; details security arrangements and priorities
2. Intercreditor Provisions: Needed for complex subordination structures with multiple creditor classes
3. Agent Provisions: Required for syndicated subordinate loans with an facility agent
4. Currency Provisions: Needed if the loan involves foreign currency or cross-border elements
5. Tax Provisions: Detailed tax clauses required if there are cross-border elements or specific tax considerations
6. Increased Costs and Market Disruption: Required for floating rate loans or where regulatory changes might impact costs
7. Majority Lender Decisions: Required for syndicated loans to govern decision-making process
1. Form of Drawdown Request: Standard form for requesting loan disbursements
2. Conditions Precedent: List of required documents and conditions for loan effectiveness
3. Form of Transfer Certificate: Standard form for transferring loan participations
4. Repayment Schedule: Detailed schedule of repayment dates and amounts
5. Financial Covenants: Detailed financial ratios and calculations
6. Form of Compliance Certificate: Template for periodic compliance reporting
7. Existing Security: Details of any existing security arrangements
8. Contact Details: Administrative and notice details for all parties
Relevant legal definitions
Acceleration Event
Account Bank
Additional Lender
Administrative Party
Affiliate
Authorisation
Available Commitment
Availability Period
Block Notice
Borrower
Business Day
Commitment
Compliance Certificate
Default
Default Notice
Disruption Event
Distribution
Drawdown Date
Drawdown Request
Event of Default
Facility
Facility Office
Finance Document
Finance Party
Financial Indebtedness
Financial Year
Group
Holding Company
Increased Cost
Indian GAAP
Information Package
Insolvency Event
Interest Payment Date
Interest Period
Lender
Loan
Major Default
Margin
Material Adverse Effect
Obligor
Original Financial Statements
Participating Member State
Party
Permitted Payment
Potential Event of Default
Principal Amount
Qualifying Lender
Quotation Day
Reference Banks
Repeating Representations
Representatives
Screen Rate
Security
Security Document
Senior Debt
Senior Finance Document
Senior Lender
Subordinated Debt
Subordinated Rights
Subordination
Subsidiary
Tax
Tax Credit
Tax Deduction
Tax Payment
Total Commitments
Transfer Certificate
Transfer Date
Turnover Proceeds
Unpaid Sum
Account Bank
Additional Lender
Administrative Party
Affiliate
Authorisation
Available Commitment
Availability Period
Block Notice
Borrower
Business Day
Commitment
Compliance Certificate
Default
Default Notice
Disruption Event
Distribution
Drawdown Date
Drawdown Request
Event of Default
Facility
Facility Office
Finance Document
Finance Party
Financial Indebtedness
Financial Year
Group
Holding Company
Increased Cost
Indian GAAP
Information Package
Insolvency Event
Interest Payment Date
Interest Period
Lender
Loan
Major Default
Margin
Material Adverse Effect
Obligor
Original Financial Statements
Participating Member State
Party
Permitted Payment
Potential Event of Default
Principal Amount
Qualifying Lender
Quotation Day
Reference Banks
Repeating Representations
Representatives
Screen Rate
Security
Security Document
Senior Debt
Senior Finance Document
Senior Lender
Subordinated Debt
Subordinated Rights
Subordination
Subsidiary
Tax
Tax Credit
Tax Deduction
Tax Payment
Total Commitments
Transfer Certificate
Transfer Date
Turnover Proceeds
Unpaid Sum
Clauses
Interpretation
Facility Terms
Subordination
Purpose
Conditions Precedent
Drawdown
Interest
Repayment
Prepayment
Tax Gross-up
Increased Costs
Payments
Set-off
Representations
Information Covenants
Financial Covenants
General Covenants
Events of Default
Changes to Parties
Payment Mechanics
Turnover of Receipts
Amendments and Waivers
Notices
Calculations
Partial Invalidity
Remedies and Waivers
Confidentiality
Counterparts
Governing Law
Enforcement
Jurisdiction
Security
Ranking and Priority
Agency Provisions
Costs and Expenses
Indemnities
Currency
Assignments and Transfers
Third Party Rights
Intercreditor Provisions
Facility Terms
Subordination
Purpose
Conditions Precedent
Drawdown
Interest
Repayment
Prepayment
Tax Gross-up
Increased Costs
Payments
Set-off
Representations
Information Covenants
Financial Covenants
General Covenants
Events of Default
Changes to Parties
Payment Mechanics
Turnover of Receipts
Amendments and Waivers
Notices
Calculations
Partial Invalidity
Remedies and Waivers
Confidentiality
Counterparts
Governing Law
Enforcement
Jurisdiction
Security
Ranking and Priority
Agency Provisions
Costs and Expenses
Indemnities
Currency
Assignments and Transfers
Third Party Rights
Intercreditor Provisions
Relevant Industries
Banking & Financial Services
Real Estate
Infrastructure
Manufacturing
Technology
Healthcare
Energy
Telecommunications
Retail
Construction
Mining
Agriculture
Relevant Teams
Legal
Finance
Treasury
Compliance
Risk Management
Corporate Finance
Credit
Investment Banking
Company Secretarial
Loan Operations
Relevant Roles
Chief Financial Officer
Finance Director
Legal Counsel
Corporate Lawyer
Investment Manager
Credit Risk Manager
Treasury Manager
Loan Officer
Compliance Officer
Corporate Finance Manager
Investment Banker
Restructuring Advisor
Banking Lawyer
Financial Controller
Company Secretary
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