HRS §490:1-310
What it means to make a debt lower priority
This section says a debt can be made lower priority than another debt of the same person, either when it is issued or by a creditor agreeing to step back. This lower priority does not create a security interest against the debtor or other creditors.
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The statute, as written — Subordinated obligations
An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.
LawTrove is not legal advice. The summary above is a computer-generated restatement — the authoritative text is the official version linked above.