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Seventh Circuit Holds That Debtor Cannot Circumvent Bankruptcy's Absolute-Priority Rule

Unless creditors accept a debtor's plan of reorganization, bankruptcy law requires the plan to provide for the payment in full of creditors before owners of the debtor receive anything on account of their equity interest....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

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