Mandatory Subordination And The Fate Of Equity Claims

Law360, New York (April 15, 2015, 10:41 AM EDT) -- When an insolvent entity files for bankruptcy, it can be tough to be a creditor. But holding equity — stock in a corporation or a membership interest in an LLC, a limited liability company — can be even worse. Under bankruptcy's "absolute priority rule," creditors generally must be paid in full before equity gets anything. That usually means that holders of equity, or claims treated as equity, get nothing....

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