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The Intercompany Subordination Agreement is essential in German corporate group structures where there are multiple layers of debt and internal financing arrangements. It is typically implemented when a corporate group has both external senior debt (such as bank loans or bonds) and significant intercompany financing. The document ensures compliance with German insolvency law requirements and corporate regulations while providing certainty to senior creditors about their priority status. It addresses specific requirements under German law regarding subordination (§39 InsO), capital maintenance rules, and corporate group relationships. The agreement becomes particularly important in refinancing situations, new senior debt issuances, or corporate restructurings where clear creditor hierarchies need to be established. It contains detailed provisions on payment restrictions, enforcement limitations, and the treatment of subordinated claims in various scenarios.

1. Parties: Identifies all parties to the agreement, including the debtor company, senior creditors, and subordinated creditors

2. Background: Explains the corporate relationship between the parties and the purpose of the subordination arrangement

3. Definitions and Interpretation: Defines key terms including Senior Debt, Subordinated Debt, Enforcement Action, and Insolvency Event

4. Subordination: Core provisions establishing the subordination of specified debt to senior debt, including treatment under §39 InsO

5. Turnover of Proceeds: Obligations to turn over any payments received in breach of subordination

6. Payment Restrictions: Restrictions on payments of subordinated debt while senior debt remains outstanding

7. Enforcement Restrictions: Limitations on enforcement actions by subordinated creditors

8. Application of Proceeds: Order of application of any recoveries or payments

9. Power of Attorney: Authority for senior creditors to act on behalf of subordinated creditors in certain circumstances

10. Duration and Release: Term of the agreement and conditions for release of subordination

11. Representations and Warranties: Basic representations regarding authority and binding nature of obligations

12. Notices: Process for giving notices under the agreement

13. Governing Law and Jurisdiction: Confirms German law as governing law and jurisdiction for disputes