Subordination clause

(redirected from Subordination Agreements)

Subordination clause

A provision in a bond indenture that restricts the issuer's future borrowing by subordinating future lenders' claims on the firm to those of the existing bondholders.

Subordination Clause

A clause in some contracts for debt stating that in the event of bankruptcy or liquidation, the debt in the contract will take priority over all other debts. This protects the creditor in the event that the debtor defaults. It is most common in mortgages and bonds. See also: Absolute Priority Rule.
References in periodicals archive ?
She also advises on intercreditor arrangements including agreements among lenders, first lien/second lien and split collateral intercreditor and other subordination agreements.
L Hernault focuses her practice on representing lenders in all aspects of secured and unsecured financing transactions, including drafting and negotiating credit agreements, security documents, letters of credit, subordination agreements, and inter-creditor agreements and negotiating and documenting debt restructuring agreements.
In the course of his practice, Hoch advises clients on the entire spectrum of corporate finance and financial restructuring matters, including counseling boards of directors with respect to fiduciary duties, transactional assignments for investors on "loan to own" strategies, debt purchases, and strategic review of complex capital structures and subordination agreements.
Intercreditor and subordination agreements commonly contain provisions stating that senior lenders' loans and associated interests and rights are superior to those of sub-debt lenders.
Debt service coverage has remained good for the 2001 series of subordinated bonds despite a restructuring of senior bond debt service, due to strong development and subordination agreements with overlapping taxing entities.
The Company has complied with the previous subordination agreements entered into in November 2004, which required that future tax payments be paid on a timely basis.
Mellberg also works extensively in real estate secured financing on behalf of both lender and borrower, with high level expertise in complex subordination agreements.
Like our bank group, they have decided it is important to protect their rights under their notes; however, under the terms of our subordination agreements, no payments can be made on the Pappas notes so long as we remain in default under our senior credit arrangements.
In connection with the SPA, the Initial Investors agreed to enter into subordination agreements (the "Subordination Agreements") with each of Silicon Valley Bank and NEIPF, L.
Compliance with these requirements was guaranteed with lease and subordination agreements.
The Plan generally provides for Envirodyne creditors to be paid in accordance with the priorities established under the Bankruptcy Code and pursuant to intercreditor and subordination agreements.