Any first-lien lenders that permit a borrower to obtain second-lien financing will try to ensure that their interests are primary to those of the second-lien lender should the borrower file for bankruptcy or default. The relative positions of first and second-lien lenders are typically described in intercreditor, or subordination, agreements that generally subordinate the rights of the second-lien lender regarding the collateral and payments from the borrower. These agreements often feature stipulations restricting the second-lien lender's rights in the event of borrower bankruptcy.

The bankruptcy-related provisions might state that the first-lien lender may vote the claims of the second lien lender against the borrower's assets to accept or reject the Chapter 11 plan of reorganization. Such a provision is intended to protect the primary position of the first-lien lender, making the second-lien lender a silent party to the plan-voting process. However, the limited case law interpreting this provision has shown that it is uncertain whether a court would conclude it is enforceable.

In one notable case, In re 203 N. LaSalle Street Ltd Partnership, the bankruptcy court concluded that the bankruptcy provision was unenforceable. The court noted that the Bankruptcy Code, rather than the language of the intercreditor agreement, "governs the determination of voting rights."