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Bankruptcy Poison Pills – New Attempts To Avoid Absolute Priority

INTRODUCTION - Recently, bankruptcy lawyers representing debtors, whether or not they are conscious of the parallels, have begun including provisions in their chapter 11 plans which can best be described as poison...more

The Absolute Priority Rule in Individual Chapter 11 Bankruptcy Cases lives on … for now

The principle behind the absolute priority rule is simple: unsecured creditors should be paid before the debtor is entitled to retain property of the bankruptcy estate. In a corporate setting the absolute priority rule...more

Split Continues Over The Interpretation Of The Absolute Priority Rule As Applied To Individual Chapter 11 Debtors

The Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") was enacted almost ten years ago, but the effect of these bankruptcy amendments is still being decided, particularly in the realm of individual Chapter 11...more

Virginia Financial Institutions - June 2013

In this issue: - CFPB Amends Ability-to-Repay Rule to Ease Standards for Small Creditors - Assistant Managers Fail to Break the Piggy Bank...For Now - Federal Agencies Make Changes to Regulation...more

Rogers Towers: Caveat Creditor: Courts Split Regarding Abrogation of Absolute Priority Rule for Individual Chapter 11 Debtors

Although the 2005 BAPCPA amendments appeared to be a boon for creditors, at least with respect to Chapter 7 claims, individual Chapter 11 debtors immediately seized upon a perceived ambiguity in Congress’ language with...more

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

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

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

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

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

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

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

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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