Absolute Priority Rule In Chapter 11 Bankruptcy
When a business files for Chapter 11 bankruptcy protection, typically some debts will not be dischargeable, and certain creditors have payment priority over others. The order of payment is referred to as the absolute priority rule, and it is carefully monitored by the Bankruptcy Court. At the Law Office of Ronald V. De Caprio, our attorneys are deeply familiar with the absolute priority rule and all aspects of bankruptcy law. Through customized strategies, we work to make Chapter 11 business bankruptcy work in each client’s favor.
Applying The Absolute Priority Rule
The absolute priority rule gives preference to certain creditors over others. The order is as follows:
- Secured creditors
- Unsecured creditors
- Preferred shareholders
- Common shareholders
Many of our clients are owners and shareholders of their businesses, and we are dedicated to protecting their interests. In some cases, the absolute priority rule may not apply, so it is important to contact our experienced lawyers as soon as possible if you are considering filing for Chapter 11 bankruptcy.
Due to our many years of experience, our team understands the need for our business clients to maintain positive relationships with many of their creditors if they plan to continue operations. While the absolute priority rule is set in stone in many cases, we will put our strong negotiating skills to work for you in an effort to preserve your relationships.
If you have further questions about the absolute priority rule in Chapter 11 bankruptcy, please feel free to call (845) 406-4201 or contact us online to schedule an appointment with an experienced attorney in Rockland County, New York.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.