NORTH CAROLINA BANKING INSTITUTE Volume 14 | Issue 1 Article 20 2010 In Re Yellowstone Mountain Club: Equitable Subordination to Police Inequitable Conduct by Non-Insider Creditors Marina Montes Follow this and additional works at: http://scholarship.law.unc.edu/ncbi Part of the Banking and Finance Law Commons Recommended Citation Marina Montes, In Re Yellowstone Mountain Club: Equitable Subordination to Police Inequitable Conduct by Non-Insider Creditors, 14 N.C. Banking Inst. 495 (2010). Available at: http://scholarship.law.unc.edu/ncbi/vol14/iss1/20 This Notes is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North Carolina Banking Institute by an authorized administrator of Carolina Law Scholarship Repository. For more information, please contact
[email protected]. In re Yellowstone Mountain Club: Equitable Subordination to Police Inequitable Conduct by Non-Insider Creditors I. INTRODUCTION [C]reditors who cause debtors' financial ruin should not be allowed to use the courts as their collection agents. The United States courts should not be enforcers for loan sharks. The Bankruptcy Code currently gives courts that power to equitably subordinate creditors who act improperly. But... it is applied inconsistently. Equitable subordination provides bankruptcy courts with the authority to place the first lien position of a self-enriching secured creditor in an inferior position to that of other secured or unsecured creditors.2 Historically, bankruptcy judges have been reluctant to use their power to subordinate3 a secured creditor's unjust claims in circumstances where they are not• • fiduciaries.5 For purposes of this Case Comment, a non-insider refers to any creditor that does not have fiduciary obligations.