It has been said that creditors have better memories than debtors. That saying rings true yet again. In Chapter 11 bankruptcy, there is a norm that all senior creditors must be paid back in full before any junior interests are satisfied at all. This is known as the absolute priority rule. In 2017, the United States Supreme Court decided Czyzewski v. Jevic HoldingCorp. (Jevic). The Jevic Court overruled a Third Circuit case, which held that a structured dismissal could deviate from the absolute priority rule in order to meet a better and quicker result in the settlement context for certain creditors in Chapter 11 bankruptcy. The Supreme Court held, in relevant part, that structured dismissals that deviate from priority rules as part of a final distribution of assets may not be approved over the
objection of creditors. Read More...
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