Document background
The Deed of Subordination of Directors Loan is essential in Canadian corporate financing arrangements where directors have provided loans to their company alongside other debt facilities. This document becomes particularly relevant when companies seek additional financing from institutional lenders who require certainty about their ranking in the creditor hierarchy. It's commonly used during refinancing, new lending arrangements, or financial restructuring, ensuring compliance with Canadian federal and provincial legislation. The deed formally documents the agreement of director-creditors to postpone their repayment rights in favor of senior creditors, typically including detailed provisions about payment restrictions, enforcement limitations, and the procedure for dealing with unauthorized payments. This type of agreement is crucial for both private and public companies across Canada, particularly when managing multiple layers of debt and maintaining clear creditor priorities.
