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Absolute Priority Rule

The “Absolute Priority Rule” and Other “Rules” of “Priority” in Bankruptcy

Are They Really “Absolute,” Are They Really “Rules,” and Do They Always Provide “Priority” to Some Claimants Over Others? At its core, corporate bankruptcy addresses the problem of the “inadequate pie.”  While occasionally the debtor will be solvent, in most cases, the debtor will, for lack of a better term, be “bankrupt”—that is, it won’t have […]


Dealing With Distress for Fun & Profit – Installment #16 – Super and Residual Priorities

This series was started with a broad overview of business bankruptcy, but our last few installments have focused on: unsecured creditors the priority scheme in bankruptcy protecting/collecting your claim In this installment, we draw on our discussion of the priority scheme, with a special focus on super and residual priorities. As previously discussed, not all […]


Dealing With Distress For Fun & Profit – Installment #13 – The Priority Scheme of Bankruptcy

A written tour of business bankruptcy and its alternatives We started this series (click here to start reading from the beginning) with a broad overview of business bankruptcy but our last several installments have focused on one small, albeit important, aspect- the automatic stay.  We’ve heard from a number of readers that they would like […]


Do’s and Don’ts of Gifting in Bankruptcy: When a Court Will Look a Gift Horse in the Mouth  

The gifting doctrine in bankruptcy is not new and often is used to obtain creditor consensus to a debtor’s proposed exit – either through a chapter 11 plan or a 363 sale. A bankruptcy “gift” typically involves a structurally senior class voluntarily giving some of its property or distribution to a structurally junior class of […]


“Don’t Pass Me By”—The Jevic Case and Bypassing the Absolute Priority Rule

It’s an all-too-familiar situation: a debtor files for chapter 11 bankruptcy and an asset sale takes place, but there is not enough money at the end of the day to fund a plan confirmation process, or adequately pay off all creditors who come first in line according to the bankruptcy code. That “line” is defined […]


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