Section 9.71 No Payment to Junior Interests

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

b. (§9.71) No Payment to Junior Interests

The second alternative for fair and equitable treatment of a class of interest sets no minimum payment to the holders, but it requires that no holders of junior interests may receive or retain any property under the plan. 11 U.S.C. § 1129(b)(2)(C)(ii). When a plan extinguishes equity interests, a principal “fair and equitable” consideration is that the debtor is insolvent. Under the rule of priorities, if the corporation is insolvent, the shareholders may not...