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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."
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
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
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
Financial Services
Banking
Real Estate
Manufacturing
Construction
Infrastructure
Retail
Technology
Healthcare
Energy
Legal
Finance
Treasury
Risk Management
Compliance
Corporate Secretarial
Credit Control
Investment
Restructuring
Corporate Finance
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
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