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The Absolute Priority Rule in Bankruptcy

The absolute priority rule, a cornerstone of bankruptcy law, was initially a judicial invention that arose in the context of railroad reorganizations whereby the secured creditors and the stockholders (often, the same people) would squeeze out the intermediate unsecured creditors through collusive practices. The rule has since been codified under section 1129 of the Bankruptcy Code and focuses on the standard for fair and equitable treatment of dissenting classes of unsecured claims. The absolute priority rule is one of the key provisions of the Bankruptcy Code that you should understand to protect your client, who has unwillingly become involved in a bankruptcy case. Learn how to protect your client from being squeezed out of chapter 11 reorganizations.


Runtime: 79 minutes
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

The Absolute Priority Rule

  • Overview
  • The Basics of the Absolute Priority Rule
  • Contexts in Which the Absolute Priority Rule Arises in Bankruptcy

Application of the Absolute Priority Rule in Plans of Reorganization

  • New Value and the U.S. Supreme Court Decision in Bank of America National Trust and Savings Association v. 203 N. La Salle Street Partnership, 119 S. Ct. 1411 (1999)
  • Sweat Equity and the U.S. Supreme Court Decision in Norwest Bank Worthington v. Ahlers, 108 S. Ct. 963 (1988)

Application of the Absolute Priority Rule in Settlement Agreements Outside of a Plan of Reorganization

  • Motorola, Inc., v. Official Committee of Unsecured Creditors and JP Morgan Chase Bank (In R Iridium Operating LLC), 478 F.3D 452 (2nd Cir. 2007)
  • In re Armstrong World Industries, Inc., 432 F.3d 507 (3d Cir. 2006)
  • Official, Unsecured Creditors' Committee v. Stern (in re SPM Manufacturing Corp.), 984 F.2d 1305 (1st Cir. 1993)
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on December 7, 2012.

Call 1-866-352-9540 for further credit information.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Craig H Averch

White & Case LLP

  • Partner at White & Case LLP in the Los Angeles office
  • Focuses on financial restructuring and insolvency
  • Experience includes workouts and restructurings of problem loans and investments, as well as insolvencies throughout the United States and Central and Eastern Europe
  • Counsels clients in the industries of transportation, retail, textile, real estate, oil and gas, energy, banking and financial services, health care, manufacturing, high tech and telecommunications
  • Served as lead debtor’s counsel in the successful Chapter 11 reorganizations of several large cases including Mirant Corporation, WCI Communities, and Natural Products Group
  • Has published numerous articles on bankruptcy and bankruptcy-related issues
  • B.B.A. degree, cum laude, and J.D. degree, University of Texas
  • Can be contacted at [email protected]

Roberto Kampfner

White & Case LLP

Roberto J. Kampfner

  • Partner at White & Case LLP in the Los Angeles office
  • Has practiced in the bankruptcy and insolvency area since his graduation from Stanford Law School in 1995 and has represented an array of debtors, creditors, committees and other interested parties
  • Served as debtor’s counsel for the Otero County Hospital Association, WCI Communities and Mirant Corporation
  • Represented a large Las Vegas, Nevada developer in a series of prepackaged bankruptcy proceedings that restructured over $200 million of debt
  • Represented Metrofinanciara, a Mexican mortgage lender in its Chapter 15 case and Philippine Airlines in its ancillary proceedings under Section 304 of the Bankruptcy Code
  • In addition to representing debtors, he has significant experience representing creditors
  • Can be contacted at [email protected]
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Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Product ID: 390744
Published 2012
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