Subordination clause

(redirected from Subordination agreement)
Also found in: Legal, Wikipedia.

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 ?
the taxpayers did not obtain a mortgage subordination agreement at the
The subordination agreement simply states that it is "junior" to the senior debt.
Selma Kent agreed to subordinate her lien and executed a subordination agreement.
The Promissory Note is subordinated to O21NA's Loan and Security Agreement with BFI Business Finance ("BFI"), pursuant to the terms of a Debt Subordination Agreement, dated March 23, 2010, by and between Costa Brava and BFI.
Wachovia Capital Finance Corporation, the Company's senior lender, and the Holder are parties to a Subordination Agreement which provides, among other things, that in the event of a default under the New Note, Wachovia has the right to prevent the Holder from taking certain action to enforce its rights under the New Note for up to 180 days (the "Standstill Period").
Vicis entered into a subordination agreement with Chatham, wherein Vicis agreed to subordinate the Vicis note to Chatham.
The Company's lenders and the PBGC have agreed to terms of an appropriate subordination agreement providing for the subordination of the PBGC lien to the existing liens held by the lenders.
Leventhal said further "The agreement with Star requires execution of a subordination agreement by our debenture holders as a prerequisite to initial funding.
The Company also expects to enter into as soon as reasonably practicable the proposed new senior secured revolving credit agreement, a related intercreditor agreement, security agreement, intercompany subordination agreement and contribution agreement.
waiving the subordination agreement related to subordinated debt issued to the Company's Chairman of the Board.
As a result of this default, outstanding principal and interest under the Note became immediately due and payable, subject to the applicable provisions of the subordination agreement between NeoPharm and Akorn's senior lenders.
Pursuant to a subordination agreement, Akorn may not make any payments to NeoPharm, and NeoPharm may not enforce any remedies against Akorn under the note until Akorn's senior debt is paid in full and the commitment for the senior debt is terminated.