Use this comprehensive template to prepare a Subordination (or Postponement) Agreement, by which one lender (the postponing creditor) subordinates and postpones its security interest under a loan agreement or similar instrument to the interest of a second lender (the senior creditor) until the indebtedness owing to the senior creditor has been satisfied. Provisions of the agreement include:

• Upon any distribution of the assets of the borrower, the indebtedness to the senior creditor would be paid in full first, before distribution to any other creditors (provided there are sufficient funds to do so).


• If the borrower is not in default under its obligations to the senior creditor, it may continue to make payments to the postponing creditor in accordance with the terms of the agreement.


• If the borrower is in default under its obligations to the senior creditor, no payments on the subordinated indebtedness shall be made by the borrower. If the postponing creditor receives any such payments, it must pay them over to the senior creditor.

This generic Subordination Agreement is provided in MS Word, and is fully editable to meet your needs.