Senior Class Gifting Is Not The End Of The Story

Law360, New York (June 21, 2011, 4:56 PM EDT) -- Much attention in the commercial bankruptcy world has been devoted recently to judicial pronouncements concerning whether the practice of senior creditor class “gifting” to junior classes under a Chapter 11 plan violates the Bankruptcy Code’s “absolute priority rule.”

Comparatively little scrutiny, by contrast, has been directed toward significant developments in ongoing controversies in the courts regarding the absolute priority rule outside of the realm of senior class gifting — namely, in connection with the “new value” exception to the rule, and whether the rule was written...
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