Commentary

62 The junior creditor’s insolvency

BANKING vol 4(1)
| Commentary

62 The junior creditor’s insolvency

| Commentary

5: EFFECTS OF SUBORDINATION

62 The junior creditor’s insolvency

As has been mentioned above, subordination is primarily important in the insolvency of the debtor but the questions which arise from the insolvency of the junior creditor also have to be considered. The fundamental question which has to be answered is whether or not the dividend payment from the insolvent debtor forms part of the insolvent junior creditor’s estate. If the dividends from the insolvent debtor form part of the estate of the insolvent junior creditor then the senior creditor is merely an ordinary creditor which must prove in the insolvency of

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