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Gifting & The Absolute Priority Rule, Brianna Walsh
Gifting & The Absolute Priority Rule, Brianna Walsh
Bankruptcy Research Library
(Excerpt)
The absolute priority rule sets forth a hierarchical scheme for the distribution of proceeds obtained through liquidating the assets of a debtor. The scheme provides that property of an estate shall be distributed to secured creditors, then to administrative and priority unsecured creditors, then to unsecured creditors, and lastly to equity holders. Under Chapter 11, section 1129(b)(2)(B)(ii) for a dissenting class of impaired creditors, a plan is “fair and equitable” only if the allowed value of such creditors claims are paid in full, or the holder of any claim or equity that is junior to the dissenting creditors will …
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bankruptcy Research Library
(Excerpt)
Under the absolute priority rule of 11 U.S.C. § 1129(b)(2)(B)(ii), a reorganization plan that gives a junior class of creditors an interest in the estate will not be confirmed unless each senior class receives full payment or gives its consent. The absolute priority rule was amended in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) by adding an exception that allows individual chapter 11 debtors to retain property included in the estate under newly added section 1115. This amendment furthers the congressional intent of allowing chapter 11 to function more like chapter 13, under which there …