A doctrine allowing bankruptcy courts to lower the priority of a claim and delay its payment until other creditors are paid. This requires showing that the creditor holding such claim is guilty of inequitable or wrongful conduct, such as fraud, illegality, breach of fiduciary duties, undercapitalization or that the creditor exercised an unreasonable level of control over the debtor and its business.

For further information, see Practice Note, The Risk of Equitable Subordination in Bankruptcy.