absolute priority rule

absolute priority rule
absolute priority rule
In a Chapter 11 Plan, the debtor-in-possession must completely satisfy the claims of a higher, dissenting class before the claims of classes lower in priority can participate in the reorganization. Thus, a corporate debtor's shareholders cannot receive distribution (or retain any interest) unless the Plan provides for the unsecured creditors to be paid in full if the class of unsecured creditors has rejected the plan.
also see plan; Chapter 11 plan; cramdown (Bernstein's Dictionary of Bankruptcy Terminology)

United Glossary of Bankruptcy Terms 2012.

absolute priority rule
In a Chapter 11 Plan, the debtor-in-possession must completely satisfy the claims of a higher, dissenting class before the claims of classes lower in priority can participate in the reorganization. Thus, a corporate debtor's shareholders cannot receive distribution (or retain any interest) unless the Plan provides for the unsecured creditors to be paid in full if the class of unsecured creditors has rejected the plan. also see Plan, Chapter 11; Cramdown

US Bankruptcy 2012.


Glossary of Bankruptcy.

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