HomeFWJ TakeawayInter-creditor agreement vs subordination agreement

What is the difference between an inter-creditor deed and a subordination agreement?

A subordination agreement is a legal document used to make the claim of one party rank behind that of another.

  • a subordination agreement can be used to record the agreement of a party to rank behind the rights of another party even where those parties have different interests
  • for example a director may have loaned money to a business unsecured but a financier may have loaned the same business money on a secured basis. The two can agree that the director will not accept repayment of his directors loan until the financier has been repaid in full.
  • because one of the parties is unsecured, an intercreditor agreement is not appropriate but a subordination agreement can establish a priority ranking for proceeds of realisation of the business assets.

A subordination agreement is an agreement whereby one party agrees to stand subordinated (behind) another.

Francis Wilks & Jones have a team with legal expertise on providing advice relating to inter-creditor deeds and subordination agreement. We are experts in all matters relating to subordination agreements, which include drafting and negotiating the subordination agreement.

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