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Letter Of Subordination Of Debts Template for Philippines

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Key Requirements PROMPT example:

Letter Of Subordination Of Debts

"I need a Letter of Subordination of Debts for a Philippine manufacturing company with three existing creditors, where two junior creditors (total debt PHP 15M) will subordinate their claims to a senior creditor (PHP 25M) as part of a corporate restructuring planned for March 2025."

Document background
The Letter of Subordination of Debts is a critical instrument in Philippine financial and corporate practice, used when there is a need to establish a clear hierarchy of debt payment rights among multiple creditors. This document becomes particularly relevant in scenarios such as corporate restructuring, project financing, or when new debt is being introduced to an existing corporate structure. The letter explicitly details which debts are to be subordinated, the conditions of subordination, and the rights of various creditors. Under Philippine law, these arrangements must comply with the Civil Code, Corporation Code, and where applicable, regulations from the Bangko Sentral ng Pilipinas. The document typically includes specific references to the relevant debts, payment conditions, and duration of the subordination arrangement, making it an essential tool in complex financing structures and debt management.
Suggested Sections

1. Date and Address Block: Formal letter heading with date and recipient's address

2. Subject Line: Clear identification of the document as a Subordination Letter

3. Parties Identification: Introduction of all parties involved - Senior Creditor(s), Subordinated Creditor(s), and Debtor

4. Reference to Existing Debts: Description of both senior and subordinated debts, including dates, amounts, and other relevant details

5. Subordination Declaration: Express statement of subordination and its terms

6. Payment Terms: Conditions under which payments can be made on subordinated debt

7. Duration: Period for which the subordination arrangement will remain in effect

8. Governing Law: Statement that the letter is governed by Philippine law

9. Signature Block: Space for signatures of all parties

Optional Sections

1. Representations and Warranties: Additional declarations by parties regarding their authority and the status of the debts - included when dealing with corporate entities

2. Events of Default: Specific circumstances that would trigger a default under the subordination arrangement - included in more complex arrangements

3. Amendment Provisions: Procedures for modifying the subordination terms - included when flexibility may be needed

4. Notice Requirements: Communication procedures between parties - included in complex arrangements with multiple parties

5. Deed of Accession: Provisions for additional creditors to join the arrangement - included when future creditors may need to be added

Suggested Schedules

1. Schedule A - Details of Senior Debt: Comprehensive list of senior debt obligations including amounts, dates, and terms

2. Schedule B - Details of Subordinated Debt: Comprehensive list of subordinated debt obligations including amounts, dates, and terms

3. Schedule C - Corporate Authorizations: Copies of corporate resolutions or authorizations (if applicable)

4. Appendix 1 - Payment Waterfall: Detailed breakdown of payment priority order

5. Appendix 2 - Form of Notice: Standard format for any required notices between parties

Authors

Alex Denne

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

Relevant legal definitions






























Clauses




















Relevant Industries

Financial Services

Banking

Real Estate

Manufacturing

Construction

Infrastructure

Retail

Technology

Healthcare

Energy

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretarial

Credit Control

Investment

Restructuring

Corporate Finance

Relevant Roles

Chief Financial Officer

Finance Director

Corporate Treasurer

Financial Controller

Legal Counsel

Corporate Secretary

Risk Manager

Credit Manager

Investment Officer

Restructuring Officer

Compliance Officer

Banking Relationship Manager

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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