Document background
A Subordinate Loan Agreement is essential in structured financing arrangements where parties intend to create a hierarchical ranking of debt obligations. This document is particularly relevant in Switzerland, where specific legal requirements govern subordination arrangements and creditor rankings. The agreement is commonly used in corporate restructurings, expansion financing, or when companies need to strengthen their capital structure while maintaining existing senior debt relationships. The Subordinate Loan Agreement must carefully address Swiss law requirements regarding subordination, including specific provisions under the Swiss Federal Act on Debt Enforcement and Bankruptcy. It typically includes detailed terms about the subordination mechanism, interest payments (which may be contingent on senior debt service), and restrictions on prepayment. The document is particularly important in the Swiss context where financial regulatory considerations may apply, especially when involving regulated entities or banking institutions.
