You’re involved in a bankruptcy event and
you’ve heard the term “Equitable Subordination.” What is Equitable Subordination? My name is
Andy Forman and I’m a Business and Consumer Bankruptcy lawyer in Tampa, Florida, and I’m
going to try and explain it to you. Equitable Subordination is an equitable remedy provided
by the bankruptcy court in certain circumstances. More specifically, when either a creditor
or one of the insiders of a corporate debtor does something inappropriate to advance their
own position, either transfer assets away where they can’t be recovered. The court can
equitably subordinate the claim of the wrong-doer such that they don’t receive any benefit until
all the other creditors receive distribution up to a hundred percent. Equitable Subordination
is a remedial power that the court has although it has the real effect of punishing the wrong-doer
by minimizing or totally mitigating their claim as a result of their wrong-doing. Equitable
Subordination is provided for and by the code and the case law. You’ll need to get competent
legal advice on this complicated issue. My name is Andy Forman. Good luck.