Subordination clause

(redirected from Subordination Clauses)

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 ?
From the lender's perspective, the desire for subordination clauses makes sense.
Lenders may insist on subordination clauses while prospective tenants are strongly opposed to them.
In light of these rules, lenders often require subordination clauses as a condition of a new loan secured by the property, while tenants may be reluctant to lease mortgaged property without the protection of a nondisturbance agreement.
in today's struggling real estate market, it's important for you to understand the impact of subordination clauses on both tenants and lenders.
If you own commercial rental property, your bank or other lender may request--or demand that you include a subordination clause in your leases.