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Contractual Subrogation in Bankruptcy and the Right to Vote

The U.S. District Court for the District of Arizona recently issued an opinion in the bankruptcy case of Avondale Gateway Center Entitlement (the debtor) affirming a bankruptcy court decision holding that the contractual subrogation, through a subordination agreement, of a senior secured lender to the rights of a junior secured lender authorized the senior lender to vote on the debtor’s Chapter 11 plan of reorganization on behalf of the junior lender.