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A Subordination Agreement shifts the priority of debts or claims, letting one creditor's rights take a back seat to another's. In Indonesian banking, these agreements often come into play when companies need additional financing but already have existing loans secured by their assets.

Under Indonesian Civil Code regulations, these agreements help lenders manage risk by clearly establishing which debt gets paid first if problems arise. For example, a bank might require other creditors to subordinate their claims before extending a new business loan. This practice is especially common in property development and corporate restructuring across Jakarta and other major business centers.

Use a Subordination Agreement when seeking new financing while existing debts are still in place. This is particularly crucial in Indonesia's real estate sector, where developers often need additional capital to complete projects that already have bank loans or supplier credits attached.

These agreements become essential during business expansion, debt restructuring, or when taking on strategic investors. For example, when a Jakarta-based manufacturer needs working capital but their assets are already pledged to other lenders, a Subordination Agreement helps secure new funding by reorganizing payment priorities. They're also valuable during merger negotiations or when arranging syndicated loans under Indonesian banking regulations.

• Real Estate Subordination Agreement: Specifically for property transactions, prioritizing new mortgage lenders over existing claims
• Subordinated Creditors Security Agreement: Governs multiple creditors' security interests, common in corporate financing
• Deed Of Subordination: Formal notarized version required for certain Indonesian transactions
• Non Disturbance Agreement: Protects tenants' rights while establishing lender priorities
• Attornment And Non Disturbance Agreement: Combines subordination with tenant recognition provisions

• Primary Lenders: Usually Indonesian banks or financial institutions providing new loans, who require subordination of existing debts
• Secondary Creditors: Existing lenders, suppliers, or investors who agree to take a lower payment priority
• Corporate Borrowers: Companies seeking additional financing while managing multiple debt obligations
• Legal Counsel: Indonesian law firms drafting and reviewing agreements to ensure compliance with OJK regulations
• Notaries: Public officials who authenticate and register these agreements, especially for real estate transactions
• Company Directors: Authorized signatories who execute agreements on behalf of their organizations

• Identify Debts: List all existing loans, their terms, and current balances with supporting documentation
• Gather Party Details: Collect legal names, registration numbers, and authorized representatives of all creditors and debtors
• Confirm Security Interests: Document all collateral and existing security rights under Indonesian law
• Define Priority Order: Clearly outline the new payment hierarchy and trigger events
• Draft Agreement: Use our platform to generate a legally-sound document that meets Indonesian regulatory requirements
• Arrange Signatures: Prepare for notarization if required by local regulations
• Register Agreement: File with relevant authorities when dealing with secured transactions

• Party Details: Full legal names, registration numbers, and authorized signatories of all creditors and debtors
• Debt Description: Specific details of senior and subordinated debts, including amounts and terms
• Priority Terms: Clear hierarchy of payment rights and enforcement provisions
• Default Provisions: Triggers and consequences under Indonesian Civil Code
• Security Interests: Description of any collateral and its priority ranking
• Governing Law: Explicit reference to Indonesian law and jurisdiction
• Execution Requirements: Notarization provisions and stamp duty compliance
• Amendment Terms: Procedures for modifying the agreement with all parties' consent

A Subordination Agreement differs significantly from an Asset Purchase Agreement in both purpose and structure, though both are crucial in Indonesian business transactions. While both documents deal with assets and financial obligations, they serve distinct functions in commercial relationships.

• Primary Purpose: Subordination Agreements rearrange payment priorities between creditors, while Asset Purchase Agreements facilitate the transfer of asset ownership
• Timing of Use: Subordination Agreements are typically used during refinancing or new loan arrangements, whereas Asset Purchase Agreements come into play during business sales or acquisitions
• Party Structure: Subordination involves multiple creditors establishing hierarchy; Asset Purchase focuses on buyer-seller relationships
• Legal Effect: Subordination modifies existing rights without transferring ownership; Asset Purchase transfers actual ownership and control
• Regulatory Framework: Subordination falls under Indonesian banking regulations, while Asset Purchase primarily involves corporate and property law