Subordination Agreement

An agreement between two creditors in which one creditor subordinates (or confirms the existing subordination of) its lien or the payment of its claim, or both, to the lien or payment in full of the claim, or both, of the other creditor. The subordination features per se of such an agreement are enforceable in a bankruptcy case under Section 510, while other provisions of the subordination agreement may or may not be enforceable.

Bankruptcy Code ยง 510(a). See also Intercreditor Agreement, Rule of Explicitness, Subordination.

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