Deed of Subordination

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Document Overview

A Deed of Subordination is a formal legal document in which one creditor (the Subordinated Creditor) agrees to rank their debt or claim below the debt owed to another creditor (the Senior Creditor).

It determines the order of repayment if the borrower becomes insolvent or defaults.
The Senior Creditor is paid first, and the Subordinated Creditor is paid after the Senior Debt has been fully settled.

It is executed as a deed - which means:
- It is signed and witnessed,
- It shows intention to be legally bound, and
- It can be enforced even without consideration (payment).

Purpose:
1. To Establish Payment Priority
2. To Secure Financing
3. To Prevent Legal Conflicts Among Creditors
4. To Protect Collateral or Security Interests
5. To Support Group or Intercompany Loans
6. To Facilitate Restructuring or Refinancing

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Deed of Subordination

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