Follow Us

Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Bankruptcy Litigation

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?

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

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. As is often the case, over the years bankruptcy and finance practitioners expanded the concept of payment subordination in these agreements to include many terms anticipating any and every action and right the subordinated creditor may take or have in the bankruptcy case. So 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?

To continue reading,
become a free ALM digital reader

Benefits include:

*May exclude premium content

Read These Next