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Intercompany Subordination Agreement

Intercompany Subordination Agreement Template for Netherlands

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Key Requirements PROMPT example:

Intercompany Subordination Agreement

"Need to draft an Intercompany Subordination Agreement under Dutch law for our manufacturing group with subsidiaries in Germany and France, where the parent company debt needs to be prioritized over all subsidiary debt, to be implemented by March 2025."

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Document background
The Intercompany Subordination Agreement is a crucial document for corporate groups operating under Dutch law that need to establish clear hierarchies between different classes of intragroup debt. It is particularly important when a group has complex financing arrangements, multiple layers of debt, or requires clear structures for risk management and creditor protection. The agreement ensures orderly treatment of intercompany obligations, especially in scenarios involving financial distress or restructuring. It typically includes comprehensive details about payment restrictions, turnover obligations, and enforcement limitations, while complying with Dutch legal requirements regarding corporate groups, contract law, and insolvency regulations. This document is essential for groups seeking to maintain transparent and legally robust financial relationships between their entities.
Suggested Sections

1. Parties: Identification of all participating group companies, including the debtor(s), subordinated creditors, and senior creditors

2. Background: Context of the group structure, existing debts, and rationale for the subordination arrangement

3. Definitions and Interpretation: Definitions of key terms including Senior Debt, Subordinated Debt, Enforcement Event, and interpretation rules

4. Subordination: Core provisions establishing the subordination of specified debts, including ranking and payment hierarchy

5. Undertakings: Key promises by the parties, including restrictions on payment of subordinated debt and enforcement actions

6. Payment Restrictions: Specific conditions under which payments on subordinated debt are prohibited or permitted

7. Turnover of Receipts: Obligations to turn over any payments received in breach of the subordination

8. Enforcement of Subordinated Debt: Restrictions on enforcement actions by subordinated creditors

9. Application of Proceeds: Rules for applying any payments or recoveries between senior and subordinated debt

10. Changes to the Parties: Provisions regarding transfers, assignments, and addition of new group companies

11. Miscellaneous: Standard boilerplate provisions including notices, amendments, and governing law

Optional Sections

1. Security: Provisions regarding security interests and their priority - include when secured debt is involved

2. Third Party Rights: Provisions regarding rights of external creditors - include when external creditors are part of the arrangement

3. Subordination Trust: Trust arrangements for managing subordinated claims - include in complex multi-party arrangements

4. Further Subordination: Provisions for multiple tiers of subordination - include when there are multiple levels of debt

5. Representations and Warranties: Specific representations about debt amounts and authority - include when required by senior creditors

6. Exit and Release Provisions: Terms for releasing subordination obligations - include when specific exit scenarios are contemplated

Suggested Schedules

1. Schedule 1 - Group Companies: List of all participating group companies and their roles

2. Schedule 2 - Existing Senior Debt: Details of all senior debt covered by the agreement

3. Schedule 3 - Existing Subordinated Debt: Details of all subordinated debt covered by the agreement

4. Schedule 4 - Form of Accession Deed: Template for new group companies to join the agreement

5. Schedule 5 - Payment Waterfall: Detailed payment priority waterfall if complex payment arrangements exist

6. Schedule 6 - Notice Details: Contact details for all parties for formal notices

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions


















































Clauses































Relevant Industries

Financial Services

Manufacturing

Energy

Infrastructure

Real Estate

Technology

Telecommunications

Healthcare

Retail

Transportation & Logistics

Mining & Resources

Professional Services

Relevant Teams

Legal

Finance

Treasury

Corporate Finance

Risk Management

Company Secretariat

Tax

Compliance

Corporate Development

Relevant Roles

Chief Financial Officer

Treasury Manager

Financial Controller

Legal Counsel

Corporate Lawyer

Finance Director

Group Financial Manager

Risk Manager

Company Secretary

Head of Corporate Finance

Restructuring Officer

Credit Manager

Senior Finance Manager

General Counsel

Head of Legal

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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