priority status of debt instruments
Thus far I thought that contractual- and structural subordination would refer to an event of default in which senior claims would be treated with priority to junior ones. However, I just read the following:
"The second lien term loan is not contractually subordinated in the traditional sense (i.e., payment subordination), but it is subordinated in its claim to the proceeds of the shared collateral."
According to that subordination in the traditional way just refers to the ongoing payments a borrower has to make? I.e. for instance in a month in which payments for TLA and high yield bonds accrue, the borrower would have to effect the payments referring to the TLA on a day prior to coupon payment?
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