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Subordinated Loan Agreement for Australia

Subordinated Loan Agreement Template for Australia

An Australian law-governed Subordinated Loan Agreement Template designed for documenting subordinated debt financing arrangements. The agreement establishes the terms and conditions for a loan that ranks junior to senior debt obligations, including detailed provisions for interest, repayment, subordination mechanics, and creditor rights. It incorporates specific requirements under Australian corporate and financial services law, particularly the Corporations Act 2001 and relevant ASIC regulations. The document includes comprehensive provisions for enforcement, security arrangements, and intercreditor relationships, while ensuring compliance with Australian banking and financial services regulations.

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Subordinated Loan Agreement

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What is a Subordinated Loan Agreement?

This Subordinated Loan Agreement Template is designed for use in Australian financing transactions where parties intend to establish a loan that ranks behind senior debt obligations. The template is particularly valuable in complex financing structures where multiple layers of debt exist. It includes all essential provisions required under Australian law, including compliance with the Corporations Act 2001 and ASIC regulations. The document is structured to protect both lender and borrower interests while clearly establishing the subordinated nature of the debt. It contains comprehensive sections on drawdown conditions, interest calculations, repayment terms, events of default, and intercreditor arrangements. The template is adaptable for various business contexts and can be modified to accommodate specific transaction requirements while maintaining its core subordination features.

What sections should be included in a Subordinated Loan Agreement?

1. Parties: Identifies and defines the Lender, Borrower, and any other relevant parties to the agreement

2. Background: Sets out the context of the loan and subordination arrangement

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. The Loan: Details the loan amount, purpose, and drawdown conditions

5. Interest: Specifies interest rate, calculation method, and payment terms

6. Repayment: Sets out repayment terms, including scheduled payments and early repayment provisions

7. Subordination: Establishes the subordinated nature of the loan and its ranking relative to senior debt

8. Representations and Warranties: Contains standard and specific representations and warranties from the Borrower

9. Undertakings: Details positive and negative covenants of the Borrower

10. Events of Default: Lists circumstances constituting default and consequences

11. Payments: Specifies payment mechanics, currency, and treatment of payments

12. Tax Provisions: Addresses tax-related matters including withholding tax and GST

13. Assignment and Transfer: Sets out conditions for transfer or assignment of rights and obligations

14. Notices: Specifies how formal notices must be given and received

15. General Provisions: Contains boilerplate clauses including governing law, jurisdiction, and amendments

What sections are optional to include in a Subordinated Loan Agreement?

1. Security: Include when the subordinated loan is secured by specific assets or guarantees

2. Guarantee: Include when third-party guarantees are required for the loan

3. Intercreditor Provisions: Include when detailed arrangements with senior creditors need to be documented

4. Conversion Rights: Include if the loan can be converted to equity under certain conditions

5. Special Mandatory Prepayment: Include if specific events trigger mandatory prepayment

6. Registration Requirements: Include if PPSR or other registrations are required

7. Financial Covenants: Include when specific financial metrics must be maintained

8. Information Rights: Include when specific reporting requirements beyond standard undertakings are needed

9. Change of Control: Include when change in borrower ownership triggers specific rights

10. Step-In Rights: Include when lender may take control under certain circumstances

What schedules should be included in a Subordinated Loan Agreement?

1. Loan Terms Schedule: Details of loan amount, interest rate, repayment dates, and other key terms

2. Drawdown Notice: Form of notice for requesting loan disbursement

3. Repayment Schedule: Detailed schedule of repayment dates and amounts

4. Conditions Precedent: List of documents and conditions required before drawdown

5. Senior Debt: Details of existing senior debt and creditors

6. Security Details: Description of any security granted (if applicable)

7. Compliance Certificate: Form of certificate for periodic compliance confirmation

8. Financial Covenant Calculations: Template for calculating and reporting financial covenants

9. Permitted Security Interests: List of security interests allowed under the agreement

10. Address Details: Contact details and addresses for notices

Authors

Alex Denne

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

Jurisdiction

Australia

Publisher

tiktok˰

Document Type

Loan Agreement

Sector

Cost

Free to use
Relevant legal definitions































































Clauses








































Relevant Industries

Financial Services

Banking

Private Equity

Real Estate

Infrastructure

Mining

Manufacturing

Technology

Healthcare

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Relevant Teams

Legal

Finance

Treasury

Corporate Development

Risk Management

Compliance

Credit

Commercial

Corporate Finance

Banking

Investment

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Finance Manager

Investment Director

Credit Manager

Risk Manager

Commercial Director

Corporate Banking Manager

Debt Finance Manager

Company Secretary

Financial Controller

Compliance Officer

Industries








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