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Subordination Deed Of Trust Template for Pakistan

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Key Requirements PROMPT example:

Subordination Deed Of Trust

"I need a Subordination Deed of Trust for a renewable energy project in Pakistan, where three bank lenders need to be ranked in order of priority, with Bank A as senior lender for PKR 500 million facility closing in March 2025, and the other two banks providing mezzanine financing."

Document background
The Subordination Deed of Trust is a crucial document in Pakistani financial transactions where multiple creditors exist with different levels of priority. This document is particularly utilized in project financing, corporate restructuring, and secured lending arrangements where a clear hierarchy of debt needs to be established. The deed creates a trust structure that manages the subordination arrangement, ensuring that junior creditors' claims are properly subordinated to senior creditors while providing protection through the trust mechanism. It addresses key aspects such as payment restrictions, enforcement rights, and the turnover of proceeds, all within the framework of Pakistani law, particularly the Trust Act 1882 and related financial regulations. The document becomes essential in scenarios involving syndicated loans, mezzanine financing, or when shareholders' loans need to be subordinated to bank debt.
Suggested Sections

1. Parties: Identifies all parties to the deed including the Senior Creditor, Subordinated Creditor, Trustee, Debtor, and any other relevant parties

2. Background: Sets out the context of the existing arrangements, details of the senior and subordinated debt, and purpose of the subordination

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

4. Trust Declaration: Formal declaration of trust, specifying the trust property and purpose

5. Subordination Provisions: Core provisions establishing the subordination arrangement and priority of payments

6. Trustee Powers and Duties: Detailed description of trustee's authority, responsibilities, and limitations

7. Payment Restrictions: Restrictions on payments to subordinated creditors and conditions for permitted payments

8. Turnover of Proceeds: Provisions for handling any proceeds received in violation of the subordination arrangements

9. Enforcement Restrictions: Limitations on enforcement actions by subordinated creditors

10. Representations and Warranties: Standard representations and warranties from all parties

11. Covenants: Ongoing obligations of the parties

12. Duration and Termination: Terms regarding the duration of the subordination and conditions for termination

13. Governing Law and Jurisdiction: Specifies Pakistani law as governing law and jurisdiction for disputes

Optional Sections

1. Security Provisions: Required when the subordination involves secured debt, detailing the hierarchy of security interests

2. Intercreditor Provisions: Needed when multiple creditors are involved beyond simple senior-subordinated structure

3. Assignment and Transfer: Include when parties want to allow transfer of rights under the deed

4. Foreign Law Recognition: Required when any party or assets are located outside Pakistan

5. Shareholder Subordination: Include when shareholders' loans are being subordinated

6. Tax Provisions: Include when specific tax arrangements need to be addressed

7. Currency Provisions: Required when dealing with multiple currencies

Suggested Schedules

1. Schedule 1 - Existing Senior Debt: Details of all senior debt facilities and amounts

2. Schedule 2 - Subordinated Debt: Details of all subordinated debt facilities and amounts

3. Schedule 3 - Security Documents: List and details of all related security documents

4. Schedule 4 - Form of Accession Deed: Template for new parties to accede to the deed

5. Schedule 5 - Notice and Acknowledgment Forms: Standard forms for required notices and acknowledgments

6. Schedule 6 - Trust Property: Detailed description of assets held in trust

7. Appendix A - Payment Waterfall: Detailed priority of payments structure

8. Appendix B - Enforcement Procedures: Specific procedures for enforcement actions

Authors

Alex Denne

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

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Relevant Industries

Banking and Financial Services

Real Estate and Property Development

Infrastructure Development

Manufacturing

Energy and Utilities

Telecommunications

Mining and Natural Resources

Construction

Healthcare

Education

Relevant Teams

Legal

Finance

Treasury

Corporate Banking

Risk Management

Compliance

Credit Administration

Corporate Governance

Investment

Project Finance

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Trust Officer

Credit Manager

Relationship Manager

Risk Manager

Company Secretary

Compliance Officer

Investment Manager

Project Finance Manager

Treasury Manager

Corporate Banking Manager

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

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