The Doctrine of Equitable Subordination as Applied to Nonmanagement Creditors

The doctrine of equitable subordination has been asserted in bankruptcy cases with increasing frequency against nonmanagement creditors of a debtor. This article examines the role of the doctrine in bankruptcy cases and the application thereof to nonmanagement creditors. The authors suggest that the doctrine has not been expanded or abused by the courts in recent years but rather that the increasing frequency with which the doctrine is raised is due to a dramatic change in the nature of business financing by nonmanagement creditors.