Subordination Agreement

Last Updated: Jun 7, 2019

Created By :

Last Edited By :

Created On :

An agreement signed by creditors of a company that subordinate one creditor’s debt under the other (see: Subordinated Debt). This makes one lender more “Senior” in terms of amortization payments or in a bankruptcy case (i.e. in liquidation scenarios, the Subordinated lender would not be paid out until the Senior lender has received all of their money back). In addition, Subordination Agreements typically have a standstill agreement to stop any interest payments to the subordinated lender if the senior lender’s defaults are declared.