Commentary

57 Turnover subordination

BANKING vol 4(1)
| Commentary

57 Turnover subordination

| Commentary

4: METHODS OF SUBORDINATION

57 Turnover subordination

There are two principal methods of subordination: first, the turnover subordination and secondly, the contractual subordination.

As the name suggests, in a turnover subordination the junior creditor proves his debt in the insolvency but ‘turns over’ any dividend which he receives to the senior creditor. There are two principal methods of achieving this:

  1. 57.1

        The first is the subordination trust where the junior creditor agrees to hold any dividends etc which it may receive on the insolvency of the debtor on trust for the senior creditor as the property of the senior creditor which the

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