It Takes Two to Tango...or Does It? The Enforceability of Intercreditor Agreements in Bankruptcy
March 15, 2010
Section 510(a) of the US Bankrutpcy Code could not be more terse: "A subordination agreement is enforceable in a case under this title to the same extent that such agreement is enforceable under applicable non-bankrutpcy law." The brevity of this single sentence leads to any number of questions and has led different courts in the US down different paths in understanding the comprehensive intercreditor agreements used in today's sophisticated financing transactions.
See this article from Financier Worldwide on two recent cases in the Bankruptcy Courts where intercreditor agreements played a critical role in the outcome.