Document background
The Deed of Subordination is essential in complex financing arrangements within Saudi Arabia where multiple creditors are involved and a clear hierarchy of debt needs to be established. This document is particularly crucial in project finance, corporate restructuring, or when new debt is being introduced alongside existing facilities. It must comply with Saudi Arabian law and Sharia principles, making it distinct from conventional subordination agreements used in other jurisdictions. The deed typically details the ranking of creditors, payment conditions, restrictions on junior debt, and enforcement mechanisms. It's commonly used in conjunction with facility agreements, particularly when introducing mezzanine financing or in situations where parent company debt needs to be subordinated to bank financing.
