Publication Date

5-1985

Journal

Vanderbilt Law Review

Abstract

The article advocates for treating debt subordination agreements as assignments of debt rather than subjecting them to Article 9 of the Uniform Commercial Code (UCC). This approach would align subordination with economic principles, simplify legal handling, and protect senior creditors' interests by ensuring they receive double dividends in bankruptcy. The author critiques current judicial interpretations that fail to recognize this distinction, leading to unfair outcomes and complicating creditor rights. The proposed framework would clarify debt ownership, dividend distribution, and security interest transfers, while also addressing tax implications and voting rights in reorganizations. The article emphasizes the need for legislative exemptions, such as amending UCC §1209, to prevent Article 9's application to subordination agreements and avoid conflicts with bankruptcy policy.

Volume

38

Issue

4

First Page

975

Last Page

1034

Publisher

Vanderbilt University Law School

Disciplines

Law

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