equitable subordination
equitable subordination
the lowering of priority of a claim because the holder of the claim is found to be guilty of some kind of improper conduct (Glossary of Common Bankruptcy Terms)

The action by which a court postpones payment to one creditor until others are paid. This is usually based upon the inequitable or wrongful conduct of the postponed creditor.
If the sole shareholder of a debtor corporation improperly dealt with the assets of the company, the repayment of that shareholder's actual loans to the company may be equitably subordinated to all other creditors. (Bernstein's Dictionary of Bankruptcy Terminology)

United Glossary of Bankruptcy Terms 2012.

equitable subordination
The action by which a court postpones payment to one creditor until others are paid. This is usually based upon the inequitable or wrongful conduct of the postponed creditor. If the sole shareholder of a debtor corporation improperly dealt with the assets of the company, the repayment of that shareholder's actual loans to the company may be equitably subordinated to all other creditors.

US Bankruptcy 2012.


Glossary of Bankruptcy.

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