7th Circ. Reaffirms Absolute Priority Rule In Ch. 11

Law360, New York (February 15, 2013, 8:48 PM EST) -- The Seventh Circuit on Thursday held that a bankrupt entity’s reorganization plan that offers new value from insider investors cannot get around the absolute priority rule that entitles creditors to full payment before equity investors receive anything, becoming the first circuit to tackle the issue in more than a decade.

In a move that could have big implications, the panel reversed an Indiana bankruptcy judge's confirmation of bankrupt shopping center owner Castleton Plaza LP's plan, which awarded Mary Clare Broadbent, the wife of Castleton owner George...
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