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Cramdown of Subordination Rights After In re Tribune: The Interplay Between 11 U.S.C. 510(a) and 1129(b)(1)

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, October 20, 2021

Recorded event now available

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This CLE course will guide bankruptcy counsel in understanding the interplay between Bankruptcy Code Sections 510(a) and 1129(b)(1) and how a plan of reorganization can be confirmed even if it allocates to subordinated creditors some portion of the amount owed to a senior creditor under a pre-petition debt subordination agreement. The program will review In re Tribune, 972 F.3d 228 (3d Cir. 2020) and discuss the flexibility it may offer debtors and the leverage it may provide to subordinated creditors. The panel will also review open questions created by the Third Circuit's opinion.


Tribune reminded debtors and creditors alike that Bankruptcy Code Section 1129 does not require strict compliance with a debt subordination agreement between similarly situated creditors if the plan does not "discriminate unfairly" against the senior creditor.

The test for determining whether a plan "unfairly" discriminates is not mechanical. Counsel must evaluate what creditors are entitled to receive under different circumstances, yet what factors to compare is a question of court discretion under the facts of the case. Bankruptcy counsel must know what the court will consider, the burden of proof, and the standard of review on appeal. If the creditors are entitled to different priorities, an entirely different standard applies.

The ability to deviate from the strict enforcement of a subordination agreement will give debtors some leverage in pre-bankruptcy negotiations. But senior lenders may have non-bankruptcy remedies against the subordinated creditors that eclipse any benefit of cramming down the plan.

Listen as this experienced panel of bankruptcy counsel discusses the rationale of Tribune, the critical facts that may make it distinguishable from future cases, and how Sections 510(a) and 1129(b)(1) may change the way some Chapter 11 plans are negotiated and confirmed.



  1. Relevant statutory provisions
    1. Section 510
    2. Section 1129
  2. The Tribune decision
  3. Determining unfair discrimination
  4. Practical considerations
    1. Debtors
    2. Subordinated lenders
    3. Senior lenders
    4. Non-bankruptcy remedies among creditors


The panel will review these and other pivotal issues:

  • Will creditors be able to rely on pre-petition subordination agreements after In re Tribune?
  • When does the "unfairly discriminate" standard apply versus the "fair and equitable" standard?
  • What is unfair discrimination under a Chapter 11 plan, and how is it measured?
  • Does it matter whether debt or liens are subordinated?


Tullson, Carl
Carl T. Tullson

Skadden Arps Slate Meagher & Flom

Mr. Tullson represents clients in complex debt restructurings, troubled company mergers and acquisitions, and financing...  |  Read More

VanLare, Jane
Jane VanLare

Cleary Gottlieb Steen & Hamilton

Ms. VanLare’s practice focuses on restructuring, insolvency, and bankruptcy litigation.

 |  Read More

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