Document background
The Loan Subordination Agreement is a crucial document in South African corporate finance, used when a company has multiple creditors and needs to establish a clear hierarchy of debt repayment. This agreement becomes particularly important in scenarios involving corporate restructuring, refinancing, or when new debt is being introduced alongside existing obligations. The document, governed by South African law, details how different classes of debt rank in priority, especially in events of default or insolvency. It typically includes comprehensive provisions about payment restrictions, enforcement rights, and the specific obligations of each party. The agreement is essential for protecting senior creditors' interests while allowing companies to maintain multiple layers of debt financing. It must comply with South African corporate and insolvency laws, particularly regarding business rescue proceedings and creditor rights.
