subordinated

subordinated
+ subordination/subordinated
An arrangement where one creditor or group of creditors (the junior creditor(s)) agrees not to be paid by a borrower or other common debtor until another creditor or group of creditors (the senior creditor(s)) have been paid. Broadly, there are two types of subordination: structural (common in the UK and mainland Europe) and contractual (common in the US).
On a contractual subordination, loans are made to the same company but the senior creditor and junior creditor agree priority of payment by contract.
Structural subordination arises where the senior creditor lends to a company which is lower in the group structure than the company into which the junior creditor lends. Junior creditors as creditors of the holding company effectively rank behind creditors of the operating company (in which all of the assets are usually invested) because they are a creditor of a shareholder in the holding company.
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+ subordination/subordinated
USA
Also known as subordinated. The act of lowering the payment priority of a right or a claim with respect to another right or claim.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • subordinated — subordinate, subordinated, subordination Debts or claims that have a lower status or priority than other debts or claims are subordinate. For example, creditor A may agree in a subordination agreement to have its claims on the cash flow or on the …   Financial and business terms

  • Subordinated — Subordinate Sub*or di*nate, v. t. [imp. & p. p. {Subordinated}; p. pr. & vb. n. {Subordinating}.] 1. To place in a lower order or class; to make or consider as of less value or importance; as, to subordinate one creature to another. [1913… …   The Collaborative International Dictionary of English

  • subordinated — /seuh bawr dn ay tid/, adj. Finance. noting or designating a debt obligation whose holder is placed in precedence below secured and general creditors: subordinated debentures. [SUBORDINATE + ED2] * * * …   Universalium

  • subordinated — /seuh bawr dn ay tid/, adj. Finance. noting or designating a debt obligation whose holder is placed in precedence below secured and general creditors: subordinated debentures. [SUBORDINATE + ED2] …   Useful english dictionary

  • subordinated debt — Debt that is unsecured and/or ranks for interest and repayment after the senior debt of a company. Subordinated debt may rank below senior debt in the following ways: • Repayment of principal. The more senior the debt, the earlier it will be due… …   Law dictionary

  • subordinated debenture — ➔ debenture * * * subordinated debenture UK US (also subordinate debenture) noun [C] FINANCE ► SUBORDINATED BOND(Cf. ↑subordinated bond) …   Financial and business terms

  • subordinated notes — ➔ note1 * * * subordinated notes UK US noun [plural] FINANCE ► notes (= loans for short periods) where the company or person lending the money will be paid back after others, or will receive a smaller amount than they are owed, if the person… …   Financial and business terms

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  • subordinated notes — USA Also known as subordinated debt. Junior debt that ranks behind senior debt and is repayable in bankruptcy proceedings after other senior debt has been paid. Related terms mezzanine debt Practical Law Dictionary. Gloss …   Law dictionary

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