The Equitable Subordination of Claims in Bankruptcy

The authors of this article address themselves to the problems raised by the use by bankruptcy courts of their equity powers to subordinate claims. They discuss the distinctions between subordination and disallowance, the interplay between state and federal law, res adjudicata, and the classes of cases in which equitable subordination occurs. They conclude that, while much confusion exists in this area, the equitable principles involved are generally sound and that applying them is often in the best interest of debtor, creditor, and public