Arrangements With Third-party Creditors: Subordination Of Security Interests (Video)

Hi my name is Richard Dusome and I'm a Financial Services lawyer at Gowling WLG and you are watching video #4 of our Arrangements with Third Party Creditors video series.

In this video we're going to review one course of action to address third party creditors you encounter in structuring a new senior lender financing for a prospective borrower. Specifically we will look at the formal and informal subordination of the security interest held by another third party.

There will be instances where your search under the Ontario Personal Property Security Act (known as the PPSA) uncovers a prior third party creditor of your borrower with a security interest that cannot be effectively dealt with through a PPSA Estoppel Letter or a No Interest Letter. This will typically occur when the other third party's interest is not in fact limited to a specific asset or assets like the interest of an equipment lessor. Perhaps the creditor also seeks to