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How Absolute Is The Absolute Priority Rule In Bankruptcy? The Case For Structured Dismissals, Bruce Grohsgal

William & Mary Business Law Review

This Article challenges the view that the absolute priority rule applies to a “structured dismissal” in a chapter 11 bankruptcy case, namely a court-approved settlement of certain claims by or against the debtor followed by the dismissal of the case. Under that view, the bankruptcy court cannot approve a settlement that makes a distribution to holders of junior claims unless it also provides for payment of all senior claims in full. The Supreme Court considered the question in the fall of 2016 in Czyzewski v. Jevic Holding Corp. (In re Jevic Holding Corp.). The question before the Court is: “Whether …