iiroc.ca. Debt Subordination Decoding the Code: Bankruptcy Code Section 510(a) – Subordination Agreements in Bankruptcy . The subordination clause establishes and clarifies the priority of these claims, and under what conditions. EurLex-2 EurLex-2 . This protects the … Subordination and intercreditor agreements both describe the position of importance of a lien. Standard Clauses to be inserted in subordinated debt documents that subordinate payment of junior debt to payment in full of senior debt. Holland & Knight Newsletter. The claims may come into conflict in the event of default on a debt. Let’s say that you are a bank, and you have offered a subordinated debt to Company Y. corporation ("ARGAN"), SOUTHERN MARYLAND CABLE, INC., a Maryland corporation ("SMC" and together with Argan, the "DEBTOR") and BANK OF AMERICA, N.A., a. national banking association (the "LENDER"). Seulement 11,5 pour cent de la récolte totale est soumise à une clause de subordination en vertu de laquelle les grumes récoltées par over an owner’s loans to the firm. Until all such claims of Secured Parties against the Debtor, now or hereafter existing, shall be paid in full, no gift or loan shall be made by the Debtor to the Subordinating Creditor. If subordinated debt will form part of the applicant's capital, ...] the standard Subordinated Loan Agreement must be provided in triplicate [...] along with [...] the application and the audited financial statements. Executive and Editorial Offices, 25 East 86 P th St., Suite 13C, New York, NY 10028-0553. Notwithstanding any provision of this Credit Agreement to the contrary, provided that no Event of Default has occurred and is continuing, Credit Parties may make … Subordinated debt is considered to be closer to traditional debt securities in its structure and operation. 2.2 Accrued interest on the Loan is payable by the Borrower on [___date___] (“Interest Payment Date”). Subordination clauses can primarily be found in mortgage refinancing agreements. Should any representation herein be found to be false or misleading or should any covenant herein be breached, the Secured Parties shall be entitled to exercise and may exercise any and all of its rights, powers and remedies set forth in the Debentures and in any. If a debtor wishes to make an older loan inferior to a newer loan, the creditors associated with each loan must execute a subordination agreement. A lien is a claim that's made by a lender on an asset, such as a home. This Agreement is given to the Secured Parties to induce it to close and consummate the extension of credit evidenced by the Debentures, and with full knowledge that the Secured Parties have and shall continue to rely upon the representations, covenants and provisions set forth herein in making any additional advances under the Debentures and in extending any additional credit to the Debtor. The delay or failure of the Secured Parties to exercise any right, power or remedy shall in no event be construed as a waiver or release thereof. The Subordinating Creditor agrees (i) not to commence or threaten to commence any action or proceeding, sue upon, or to collect, or to receive payment of the principal or interest of any claim or claims now or hereafter existing which the Subordinating Creditor may hold against the Debtor, (ii) not to sell, assign, transfer, pledge, hypothecate, or encumber such claim or claims except subject expressly to this Subordination Agreement, and not to enforce or apply any security now or hereafter existing therefor, (iii) not to file or join in any petition to commence any proceeding under the Bankruptcy Code, and (iv) not to take any lien or security on any of Debtor's property, real or personal (which shall not require the termination of a lien or security of Subordinating Creditor that exists on the date hereof, provided that such lien or security is not amended following the date hereof), in each case, until 91 days following the date all claims of Secured Parties against the Debtor have been indefeasibly satisfied in full. Mention of clauses subordinating the loan to other debts of the issuer already contracted or to be contracted. These Standard Clauses have integrated notes with important explanations and drafting and negotiating tips. The subordination clause establishes and clarifies the priority of these claims, and under what conditions. subordination clauses in mortgages refer to the portion of your agreement with the mortgage company that says their lien takes precedence over any other liens you may have on your property. Et le juge tenait de l'article 12 al. It is most common in mortgages and bonds. WAIVER OF JURY TRIAL. Refinancing Mortgages and Subordination Agreements Sometimes, the priority of liens is controlled by a special agreement called a "subordination agreement." The reason is both mortgages and leases establish claims on real property. The payment of principal of this Note is subordinated to all existing and future indebtedness and liabilities of the Company other than other subordinated notes and trade payables, and is a general, unsecured obligation of the Company. Subordination & Standstill Agreements. The subordination clause is the legal agreement that establishes the order of priorities in the form of a clause (within a contract). Let’s take a simple example to illustrate this. If you enter into an agreement with a lender and the agreement contains a subordination clause, it usually means that this debt will stay senior to any debt incurred afterward. A junior creditor, which is a creditor whose loan takes a subordinate position to another loan, may increase the chances of the project being successful, or increasing the property’s value, by its willingness to subordinate to another lender. A subordination agreement is a legal document that can also be presented in the court of law; therefore, it is crucial to carefully frame this agreement and take advice from a legal expert or advisor before you get it signed by the borrower. Alternate name: Junior debt If a first mortgage is paid off, a second mortgage then becomes the first mortgage. Fin. Additional filters are available in search, All contents of the lawinsider.com excluding publicly sourced documents are Copyright © 2013-, Trustee’s Relation to Senior Indebtedness, Reliance by Holders of Senior Indebtedness on Subordination Provisions, Securities Subordinate to Senior Indebtedness, Securities Subordinated to Senior Indebtedness, Subrogation to Rights of Holders of Senior Indebtedness, Priority and Payment Over of Proceeds in Certain Events, No Payment of Note Under Certain Conditions. When to Use a Subordination Loan Agreement There are many reasons a subordination loan agreement makes sense. While any part of the Debentures from the Secured Parties remains unpaid, the Debtor will not satisfy or make any payments upon any debts, claims, redemption rights, loan obligations or any other obligations of any type whatsoever (collectively, the "Subordinating Creditor's Claims") to the Subordinating Creditor whether existing at the time of the making of this Agreement or arising hereafter; provided, however, that nothing contained in this Subordination Agreement shall be deemed to preclude the Debtor from (i) making regularly scheduled interest payments (but no payments of principal) on the Subordinated Indebtedness, provided that there are no amendments to the Subordinated Indebtedness that alters the terms of the interest payments, (ii) paying compensation to the Subordinating Creditor consisting of base salary and bonus pursuant to any existing agreement in effect as of the date of this Subordination Agreement as long as any increase in salary or bonus is approved by the Board of Directors or (iii) reimbursing the Subordinating Creditor for business expenses incurred on behalf of the Debtor. Sample 1 Sample 2 Very meta, I know. One type of subordination agreement is typified in corporate issues of sub- ordinated bonds and debentures; while the other basic type is most often used in connection with bank loans to corporate borrowers. This Agreement shall be construed in accordance with the laws of the State of New York in accordance with the terms of the Purchase Agreement. Subordination is a legal agreement which establishes one debt as ranking behind another debt in the priority for collecting repayment from a debtor. Subordination. How to Create a Subordination Agreement The reason is both mortgages and leases establish claims on real property. ... For example, most adverbial clauses usually follow the main clause, although they can also come before the main clause. KEVIN J. THOMAS, an individual (the "CREDITOR"), ARGAN, INC., a Delaware. A subordination agreement (sometimes called a priority agreement or a priorities agreement) is given by one creditor in favour of another, and typically deals with subordination by the granting creditor of both security interests governed by the Act and of the right to payment. market with a subordination clause, it insures that if more bonds are issued in the future the original bondholders will receive payment before the company pays all other debt issued after it. Subordination of Debt. It assigns your new mortgage to first lien position, making it possible to refinance with a home equity loan or line of credit. Subordination is the process by which a creditor is placed in a lower priority for the collection of its debt from its debtor's assets than the priority the creditor previously had, In common parlance, the debt is said to be subordinated but in reality, it is the right of the creditor … NOW, THEREFORE, as a material inducement to the Secured Parties to make or continue the Debentures to the Company, and in consideration of the benefits accruing to the Subordinating Creditor by reason of the Debentures, the parties hereto, jointly and severally, covenant and agree as follows: Payments on Subordinating Creditor's Claims. Subordination is a way of changing the priority of claims against a debtor so that one creditor or group of creditors (the junior creditor(s)) agree that their debt will not be paid until debts owed to another creditor or group of creditors (the senior creditor(s)) have been paid.. Each Credit Party agrees that all intercompany Indebtedness among Credit Parties (the “Intercompany Debt”) is subordinated in right of payment, to the prior payment in full of all Credit Party Obligations. THIS SUBORDINATION OF DEBT AGREEMENT (" Subordination Agreement ") is made this 25th day of September, 2013, by and between Aspen Group, Inc., a Delaware corporation (the “ Company ”), Aspen University, Inc., a Delaware corporation (the “ Subsidiary ” and, collectively with the Company, the " Debtor "), and Michael Mathews (the " Subordinating Creditor ") in favor of the parties listed on Schedule A (the … No right, power or remedy of the Secured Parties as provided in this Subordination Agreement is intended to be exclusive of any other right, power or remedy of the Secured Parties provided in any document executed in connection with the Debentures, but each and every such right, power and remedy shall be cumulative and concurrent and in addition to any other right, power or remedy available to the Secured Parties now or hereafter existing at law or in equity and may be pursued separately, successively or together at the sole discretion of the Secured Parties. Clause utile dans les contrats prévoyant l'élaboration d'une tâche très précise ou devant se développer dans une durée déterminée. n. a written contract in which a lender who has secured a loan by a mortgage or deed of trust agrees with the property owner to subordinate the first loan to a new loan (thus giving the new loan priority in any foreclosure or payoff). This means that if the house is sold, the debt owed under the primary mortgage gets paid off first. A subordination clause is important in commercial real estate with respect to real estate finance and lease agreements. IN WITNESS WHEREOF, we have hereto set our hands and seals as of the date first above written. Subordination of Intercompany Debt. Subordination to Senior Debt. This protects the creditor in the event that the debtor defaults. A subordinate clause in a mortgage states that all original claims on a debt must be paid before any new ones. Subordinated Creditors Beware: Subordination Clauses Don’t Trump the Statute of Limitations. THIS AGREEMENT is made as of the 31st day of January, 2005 by and among. 3 Repayment The Loan is granted for a undefined period. Under a subordination agreement, the subordinated secured creditor: 1. subordinates to the senior secured creditor the security interests granted to it by the debtor; and 2. agrees to postpone payments to it by the debtor until the senior secur… The subordination clause is the legal agreement that establishes the order of priorities in the form of a clause (within a contract). RSCR Publications LLC Published 12 times a year by RSCR Publications LLC. subordination and postponement to be senior subordinated debt or senior in right of payment to claims of the class of junior subordinated debt; (iii) subject to clause (ii) of this paragraph 2(b) the Creditor, if the Creditor is not a Bank, hereby further agrees that the Debt herein subordinated and Signing your agreement is a positive step forward in your refinancing journey. THIS SUBORDINATION AGREEMENT dated as of April 22, ... Borrower is prohibited from executing the Subordinated Notes and incurring the debt evidenced thereby, without the consent of the Agent and Lenders; and . Now that you’ve learned what this document is all about, the next step is actually making it. Barbra R. Parlin. Very meta, I know. Subordination. Let’s back up a bit because we have a vocab term within a vocab definition. Purpose of a Subordinate Clause A … Pros & Cons of Subordination Vs. Inter-Creditor Agreement. Il est important pour les partenaires qu'un article du contrat permette au créancier d'une obligation inexécutée de mettre fin à la relation, en dehors du pouvoir d'appréciation des tribunaux que l'article 1184 du Code civil leur reconnaît. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. Varieties of Subordination Agreement Long Forms. In English grammar, a subordinate clause is a group of words that has both a subject and a verb but (unlike an independent clause) cannot stand alone as a sentence. Subordination. The Subordinating Creditor agrees that, if it should accept or receive any payment from the Debtor in contravention of Section 1(a) hereof, the Subordinating Creditor shall hold same in trust for the Secured Parties and agree that it shall have absolutely no rights in or to or dominion over such payments except to pay them promptly to the Secured Parties; and the Subordinating Creditor hereby covenants to do so, and until such payments are received by the Secured Parties, the Subordinating Creditor shall be personally liable to the Secured Parties for same, together with all reasonable attorneys' fees and costs incurred by the Secured Parties in collecting such payments from the Subordinating Creditor. La dénonciation représente la possibilité pour un consommateur de résilier un contrat comportant une clause de tacite reconduction lorsqu’il arrive à son échéance.Cette faculté doit être mentionnée dans les conditions générales d’abonnement. Exhibit 10.4. THIS SUBORDINATION OF DEBT AGREEMENT ("Subordination Agreement") is made this 25th day of September, 2013, by and between Aspen Group, Inc., a Delaware corporation (the Company), Aspen University, Inc., a Delaware corporation (the Subsidiary and, collectively with the Company, the "Debtor"), and Michael Mathews (the "Subordinating Creditor") in favor of the parties listed on Schedule A (the "Secured Parties"). SUBORDINATION AGREEMENT. THIS SUBORDINATION AGREEMENT (this “ Agreement ”) is dated as of April 17, 2007, by and among MEDICAL SOLUTIONS MANAGEMENT INC. (“ Borrower ”), VICIS CAPITAL MASTER FUND, as the holder of the Senior Debt, as defined below (in such capacity, the “ Senior Creditor ”), APOGEE FINANCIAL INVESTMENTS INC. . What Is a Subordinate Clause in a Mortgage? A subordination clause is important in commercial real estate with respect to real estate finance and lease agreements. A subordination agreement is a legal document that can also be presented in the court of law; therefore, it is crucial to carefully frame this agreement and take advice from a legal expert or advisor before you get it signed by the borrower. A subordinate clause in a second or third mortgage gives the first mortgage priority. Upon receiving the express written consent of the Subordinating Creditors, the Secured Parties shall be authorized to make optional future advances to the Debtor. The Subordinating Creditor agrees that any and all of the Subordinating Creditor's Claims shall be deemed subordinate to the Debentures and all claims of the Secured Parties against the Debtor, and in the event of the liquidation of the Debtor or distribution of its assets, the Debentures shall be satisfied and discharged before the Subordinating Creditor receives any distributive share or payment on account of the Subordinating Creditor's Claims; and the Subordinating Creditor further agrees to execute and deliver to the Secured Parties such assignment(s) or other instruments as may be required by the Secured Parties in order to enable it to enforce any and all such claims and to collect any and all dividends or other payments or disbursements which may be reasonably made at any time on account of all or any portion of the Subordinating Creditor's Claims hereby subordinated. The subordination clause, also known as the subordinate clause in real estate, finance, and banking refers to the order of priorities in claims for ownership or assets. When a business secures a second loan by using the same property as collateral, the owners can choose either to have the first lender subordinate the new loan into the first loan or obtain a new loan subordinated to the first. This is added protection for the original bondholders as the likelihood of them getting their investment back is higher with a subordination clause. The Subordinating Creditor hereby expressly waives all notices with respect to the creation, renewal, modification, extension or enlargement of the Debentures. A clause in some contracts for debt stating that in the event of bankruptcy or liquidation, the debt in the contract will take priority over all other debts. Should repayment become an issue, such as in bankruptcy, the subordinate loans would take a backseat to the original mortgage, and may not be paid at all. Subordination of debt Subordination is the process by which a creditor is placed in a lower priority for the collection of its debt from its debtor's assets than the priority the creditor previously had,  In common parlance, the debt is said to be subordinated but in reality, it is the right of the creditor to collect the debt that has been reduced in priority. SUBORDINATION AGREEMENT . Debt Subordination Agreement Form – Subordinated debts are loans or borrowed funds which could only be paid after the senior creditors of the debt will be paid. Let’s back up a bit because we have a vocab term within a vocab definition. Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by each other Loan Party (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.07. means an agreement to put a debt or claim which has priority in a lower position behind another debt, particularly a new loan. 74 0 obj iiroc.ca. In case of any assignment for the benefit of creditors by the Debtor or in case any proceedings under the Bankruptcy Code are instituted by or against the Debtor, or in case of the appointment of any receiver for the Debtor's business or assets, or in case of any dissolution or winding up of the affairs of the Debtor: (a) the Debtor and any assignee, trustee in Bankruptcy, receiver, debtor in possession or other person or persons in charge are hereby directed to pay to Secured Parties the full amount of Secured Parties claims against the Debtor (including interest to the date of payment) before making any payment of principal or interest to the Subordinating Creditor, and insofar as may be necessary for that purpose, the Subordinating Creditor hereby assigns and transfers to the Secured Parties all security or the proceeds thereof, and all rights to any payments, dividends or other distributions, and (b) the Subordinating Creditor hereby irrevocably constitutes and appoints each Secured Party its true and lawful attorney to act in its name and stead: (i) to file the appropriate claim or claims on behalf of such Creditor if the Subordinating Creditor does not do so prior to 30 days before the expiration of the time to file claims in such proceeding and if any Secured Parties elects at its sole discretion to file such claim or claims and (ii) to accept or reject any plan of reorganization or arrangement on behalf of the Subordinating Creditor, and to otherwise vote the Subordinating Creditors claim in respect of any indebtedness now or hereafter owing from the Debtor to the Subordinating Creditor in any manner the Secured Parties deem appropriate for their respective own benefit and protection. Subordination clause. It is of utmost importance to include such clauses which both parties can adhere to. subordination agreement. As the name suggests, the debt which is subject to subordination when the creditor’s default is called subordinated debt. DEBT SUBORDINATION AGREEMENT. A good example of which would be when a firm has agreed to let a bank loan take precedence (seniority) Ill. Jan. 10, 2019), the U.S. Bankruptcy Court for the Northern District of Illinois ruled that, in accordance with section 510(a) of the Bankruptcy Code, a standby clause in a subordination agreement prevented a subordinated lender from conducting discovery concerning the senior lender’s claims. Subordination is the act of yielding priority. This file is ready-made and designed to help you create a comprehensive agreement document that is legally binding and professionally made. WHEREAS, the Secured Parties have agreed to extend credit to the Company pursuant to the terms of Securities Purchase Agreement, dated as of September 25, 2013, between the Company and the Secured Parties (the Purchase Agreement) and to purchase the 8% Original Issue Discount Secured Convertible Debentures due April 1, 2015 issued by the Company in the original aggregate principal amount of $2,240,000 (collectively, the "Debentures") thereunder; WHEREAS, the Debtor issued certain promissory notes to the Subordinating Creditor on March 13, 2012, August 14, 2012 and July 1, 2013, as amended, and, pursuant to such promissory notes, the Debtor owes $1.6 million in principal amount, together with accrued interest thereon, to the Subordinating Creditor (the Subordinated Indebtedness); and. [Banque] subordination de la dette [les prêts contractés avant la date butoir ont un rang inférieur à ceux contractés postérieurement] A clause in some contracts for debt stating that in the event of bankruptcy or liquidation, the debt in the contract will take priority over all other debts. When two lenders make loans to a debtor at the same time, it is common for the loan documents to include agreements between the lenders as to the relative priority and rights of each lender vis a vis the other. Subordinated Creditor hereby subordinates the Indebtedness of the Company evidenced by the Subordinated Loan Agreement (the “Subordinated Indebtedness”), to any and all Indebtedness now or hereafter owing by the Company to the Senior Lender, including, without limitation, the Liabilities under the Loan Agreement, whether direct or indirect, absolute or contingent, joint or … A subordination agreement is simply a legal document entered into between two or more parties who wish to change the legally established priority of loans. Such transactions can require the implementation of lien subordination intercreditor agreements on an expedited basis with little time for negotiation. This primary loan is also called senior debt. The claims may come into conflict in the event of default on a debt. This Agreement shall be binding upon the Debtor and the Subordinating Creditor and their respective heirs, successors and assigns and shall inure to the benefit of the Secured Parties, its successors and assigns. While the loans are outstanding, irrespective of the maturity date of any of the Subordinating Creditor's Claims, the Subordinating Creditor hereby expressly waives any and all rights to payment by the Debtor of any and all of the Subordinating Creditor's Claims prior to repayment in full of the Debentures to the Secured Parties. AT1 hybrids on the other hand do exhibit many equity characteristics. A debt subordination agreement is a contract in which a junior creditor agrees that its claims against a debtor will not be … A clause in an agreement which states that the current claim on any debts will take priority over any other claims formed in other agreements made in the future. subordination provisions of the subordinated notes indenture in question was to assure payment in full of the senior notes before there was any recovery on the subordinated notes. Each Secured Party is hereby authorized by the Subordinating Creditor to: (a) renew, compromise, extend, accelerate or otherwise change the time of payment, or any other terms, of the extension of credit pursuant to the Debentures and any future loans or extensions of credit, (b) increase or decrease the rate of interest payable thereon or any part thereof, (c) exchange, enforce, waive or release any security therefor, (d) apply such security and direct the order or manner of sale thereof in such manner as such Secured Party may at its discretion determine, and (e) release the Debtor or any guarantor of any indebtedness of the Debtor from liability, all without notice to the Subordinating Creditor and without affecting the subordination provided by this Subordination Agreement. Establish claims on real property prior lienholder agrees that its lien will be subordinate ( Junior ) to subsequently... 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