Document background
A Deed of Subordination is a crucial document in multi-lender financing arrangements under Canadian law, used when there are multiple creditors lending to the same debtor and a clear hierarchy of debt needs to be established. This document is particularly important in scenarios involving secured financing, refinancing, or corporate restructuring, where different lenders have varying levels of priority in claims against the debtor's assets. The deed ensures compliance with Canadian federal and provincial regulations, including the Personal Property Security Act, Bank Act, and relevant insolvency legislation. It typically includes detailed provisions about payment restrictions, enforcement rights, and the mechanism for maintaining the agreed priority structure. The document becomes especially relevant during financial distress scenarios, where it provides clarity on the rights and obligations of different creditors.
