Philadelphia and Wilmington partner Andy Kassner and associate Joe Argentina published an article in The Legal Intelligencer titled, “Trustee Settlement of SEC Claim Approved Over Creditor Objections,” which discussed a potential violation of the absolute priority rule. 

The absolute priority rule provides that the proceeds of a bankruptcy estate should be distributed first to creditors in order of priority and, if and when creditors are paid in full, to equity holders.

In a December 2015 decision, the United States Bankruptcy Court for the Eastern District of Pennsylvania had to decide, however, if the absolute priority rule would be violated by the approval of a settlement between a Chapter 7 bankruptcy trustee and the Securities and Exchange Commission.

Andy and Joe say the case presented “yet another instance where a bankruptcy court was asked to consider how funds distributed on account of a bankruptcy claim held by a federal agency could ultimately reach successor transferees.”

Read their thoughts in “Trustee Settlement of SEC Claim Approved Over Creditor Objections” here.

Source: The Legal Intelligencer