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In today's episode of Wall Street Words, Todd Alt discusses the term "subordination agreement." This agreement is essential between creditors, particularly for senior creditors allowing a company to borrow more money. The subordination agreement ensures that the new lender acknowledges the existing senior loan, clarifying the order of repayment in case of liquidation or bankruptcy. These agreements are crucial in understanding a company's capital structure, indicating where a creditor falls in line regarding claims on assets. Subordination agreements are complex financial instruments that determine the priority of payment among creditors.