Don't Let Your Preferred Mortgage Get Equitably Subordinated

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.¹ 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.