Subordination Agreements: Enforcement and Reorganization Participation

What provisions in a subordination agreement can be enforced, and can the subordinated creditor participate in the reorganization process if there is no prospect it will receive any distribution as a result of being subordinated?

9 minute read July 01, 2021 at 12:05 AM
By
Andrew C. Kassner and Joseph N. Argentina Jr.
Subordination Agreements: Enforcement and Reorganization Participation

Section 510 of the Bankruptcy Code recognizes that agreements between creditors of a debtor that one creditor's claim will be subordinated in payment to another creditor's claim will be enforceable in a bankruptcy case.

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