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An Intercreditor and Subordination Agreement is essential in complex financing arrangements where multiple lenders or creditors are involved with different levels of priority. This document, governed by Australian law, establishes the hierarchy of creditor claims, regulates payment rights, and sets out enforcement mechanisms among different classes of creditors. It is particularly crucial in syndicated lending, project finance, and structured finance transactions where there are both senior and subordinated debt providers. The agreement ensures compliance with Australian financial services regulations and securities laws, including the Corporations Act 2001 and PPSA requirements. It typically includes detailed provisions on payment waterfalls, enforcement standstills, security sharing, and creditor rights in both ordinary course of business and default scenarios.

1. Parties: Identifies all parties to the agreement, including Senior Creditors, Junior Creditors, Security Trustee (if any), and the Borrower/Debtor

2. Background: Sets out the context of the agreement, including details of the various debt facilities and reason for the intercreditor arrangements

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Priority and Subordination: Core section establishing the ranking and priority of different classes of debt and payment waterfall

5. Payment Restrictions: Details restrictions on payments to junior creditors, including permitted payments and payment stops

6. Turnover Provisions: Requirements for junior creditors to turn over certain payments received in contravention of the agreement

7. Enforcement: Rights and restrictions regarding enforcement actions by different creditor classes

8. Application of Proceeds: Rules for the application and distribution of proceeds from enforcement or insolvency

9. Security Principles: Provisions regarding the ranking and priority of security interests

10. Representations and Warranties: Standard representations and warranties from each party

11. Undertakings: General and specific undertakings by the parties

12. Changes to the Parties: Provisions for transfers, assignments, and accession of new parties

13. Administration and Notices: Administrative provisions including notice requirements and procedures

14. Governing Law and Jurisdiction: Specifies the governing law and jurisdiction for disputes