Absolute Priority Rule, Chapter 11

Recent Court Decisions Hold That The Absolute Priority Rule Still Protects Creditors Of Individual Chapter 11 Debtors

by Daniel Gosch | Dickinson Wright on 4/18/2013

As the economic recovery continues to wind along through the up and down financial cycles that have been the hallmark of the last four years, there can be little doubt that some individuals historically on the higher end of...more

Rogers Towers: New Equity Auctions

by Jacob J. Payne | Rogers Towers on 3/7/2013

Seventh Circuit holds that new equity in a Chapter 11 debtor must be auctioned…and that a creditor may credit bid. In a Chapter 11 bankruptcy, if the debtor’s owners want to continue to own the debtor after...more

When Lenders are the Losers in Bankruptcy Court...Well, Not so Fast

by Krystyna Blakeslee | Dechert LLP on 3/1/2013

Last October, I wrote about a scheme employed, in three separate bankruptcy cases, by debtors seeking to evade the absolute priority rule in order to keep the real property owned by the debtor in the hands of the ‘family’ at...more

Seventh Circuit Reaffirms Absolute-Priority Rule in In re Castleton Plaza, LP

by Ferve Ozturk, Marc Skapof | BakerHostetler on 2/25/2013

Can an equity investor who directs an insider to contribute "new value" to a debtor under a plan of reorganization, so as to retain his interest in the company, avoid an express market test for that new equity? The answer to...more

Rogers Towers: Insiders as Equity Investors: Competition Protects Lenders from Absolute Priority Rule Circumvention

by Scott St. Amand, J. Ellsworth Summers, Jr. | Rogers Towers on 2/19/2013

Under the absolute-priority rule, unpaid creditors normally receive the equity in a reorganized business. If a plan of reorganization proposes a “new value” investment in exchange for equity, however, the rule does not...more

"New Value" Plans Require Competitive Bidding, Says 7th Circuit

by Bradley Duncan, Hugh McCullough | Davis Wright Tremaine LLP on 2/18/2013

In a decision issued yesterday, the 7th Circuit Court of Appeals held that insiders can't be given a special opportunity to invest in a bankrupt debtor under the guise of contributing "new value" unless the debtor makes the...more

Formal Objection to Confirmation not Necessary to Appeal “Absolute Priority” Violation

by Scott St. Amand, J. Ellsworth Summers, Jr. | Rogers Towers on 12/11/2012

Cramdown. The very word makes the hair on the back of lenders’ necks stand up, because in the past, there was little a lender could do once the bankruptcy court confirmed a Chapter 11 plan....more

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Absolute Priority Rule › Chapter 11