A bank must generally go to court to foreclose on the assets. Thus, while collateral is good to have and generally increases the credit quality of a loan, it is not a substitute for good credit analysis. If you think a company is going to default, don't make the loan, even if they offer you a lot of collateral. Non-investment grade companies, however, often provide collateral to their lenders in order to improve the credit quality of their loans and reduce the interest rate. Thus, the credit quality of the senior debt is enhanced at the expense of the sub or junior creditor.
Subordinated debt is generally in the form of bonds, while most bank loans are senior debt.
In such cases, bank loans are often both senior and secured. In this case, the holding company can only generate cash by collecting dividends from its subsidiary. However, if the subsidiary also has creditors, in case of a bankruptcy the subsidiary must repay all of its creditors before it can legally pay dividends to its parent. Collateral and subordination do not impact a company's ability to generate cash to repay debt. They do, however, impact which lenders get repaid in case of a bankruptcy.