Document background
The Subordinate Loan Agreement is essential in Canadian financing transactions where businesses seek additional funding while maintaining existing senior debt relationships. This document is particularly useful when companies need to raise capital without violating senior loan covenants or when implementing layered financing structures. The agreement carefully balances the interests of all parties by clearly defining the subordination terms, payment restrictions, and creditor rights within the Canadian legal framework. It includes crucial provisions regarding payment priorities, especially in insolvency scenarios, and ensures compliance with Canadian federal and provincial regulations. The document typically works in conjunction with senior loan documentation and may reference intercreditor arrangements. It's commonly used in corporate refinancing, expansion projects, or acquisition financing where multiple layers of debt are required.
