Attorney Published Article
Don’t Let Your Preferred Mortgage Get Equitably SubordinatedRead Time: 1 min
Ben Schupp (New Orleans) authored an article on equitable subordination in the Q2 2022 issue of Marine Money Magazine, the ship finance publication of record. Ben has been engaged in marine finance and the litigation of maritime lien claims for 30 years.
Equitable subordination originated as a doctrine in the bankruptcy courts that allows for subordination of claims when the claimant has engaged in some type of “inequitable conduct” which has conferred an unfair advantage on the claimant or resulted in injury to creditors. The good news is that getting your preferred ship mortgage equitably subordinated is rare and preventable. The bad news is that getting subordinated can be quite expensive. Adopted relatively infrequently by admiralty courts, equitable subordination is a favored play of outranked maritime lien creditors with few options — sort of a Hail Mary pass. However, as heartbroken football fans are well aware, sometimes those passes hit pay dirt.
How can such subordination be prevented?