Subordination of claims in insolvency law
PhD student: Mr R.M.K. Fransis
Promotor: Prof E. Dirix
PhD defence: Leuven, 23/12/2013
The research focuses on the (contractual) subordination of claims in Belgian insolvency law. Based on the functional comparative law method (The Netherlands, France, UK and US), the research aims to qualify the subordination of claims and to analyse its validity and enforceability vis-à-vis third parties. The research has demonstrated that:1. A basic distinction needs to be made between subordination agreements that aim to modify the rank of the junior claim in insolvency proceedings and subordination agreements that create an order of payment outside insolvency proceedings without affecting the rank of the junior claim.2. The effects of subordination depend upon the structure of the subordination agreement.3. Contractual subordination is valid and does not infringe the pari passu or paritas creditorum rule.4. Third parties, i.e. other creditors who do not benefit from the subordination are held to recognise the effects of the subordination between the junior and the senior;5. In insolvency proceedings such as bankruptcy proceedings, the trustee or administrator is held to give effect to contractual subordination agreements.