Skip to content

ABSOLUTE-PRIORITY RULE

absolute-priority  rule.Bankruptcy.  The  rule  that  a  confirmable  reorganization  plan  must

provide  for  full  payment  to  a  class  of  dissenting  unsecured  creditors  before  a  junior  class  of

claimants  will  be  allowed  to  receive  or  retain  anything  under  the  plan.  •  Some  jurisdictions

recognize an exception to this rule when a junior class member, usu. a partner or shareholder of

the  debtor,  contributes  new  capital  in  exchange  for  an  interest  in  the  debtor.  11  USCA  §

1129(b)(2)(B)(ii). [Cases: Bankruptcy    3561. C.J.S. Bankruptcy § 395.] [Blacks Law 8th]