Sixth Circuit Rules that Individual Chapter 11 Debtors are Subject to the Absolute Priority Rule

One of the fundamental tenets of a business bankruptcy reorganization plan under
Chapter 11 of the Bankruptcy Code is the "absolute priority rule."
This rule, codified in section 1129(b)(2)(B)(ii) of the Bankruptcy Code,
provides that every unsecured creditor must be paid in full before the debtor
can retain any property under a reorganization plan. Chapter 11, however, is
not solely the domain of business debtors. Individuals (who more commonly seek
protection under Chapters 7 and 13) may also file for Chapter 11. So how does
the absolute priority rule affect individual debtors? That issue is analyzed in
a recent opinion, Ice House America, LLC v. Cardin, issued by the U.S.
Court of Appeals for the Sixth Circuit. Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 11