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Firms create priority rankings among their creditors in three major ways: by issuing secured debt, subordinated public debt, and debt that sometimes results in later creditors subordinating their claims to earlier creditors. The Bankruptcy Code enforces all of these state law priorities. Scholars have extensively explored the efficiency properties of secured debt, and some analysts have begun to question the Code's respect for it. Commentators, however, have devoted relatively little attention to "subordination priorities." These priorities are this Article's primary subject.

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