The Absolute Priority 'Rule' (APR) in Bankruptcy: Has It Now Been Enabled by the Courts to Allow Creditors to Liquidate Productively Viable U.S. Corporations?

Abstract

This paper evaluates the Absolute Priority Rule and a new legal means for its application by the Courts that creates enormous opportunities for profitable financial schemes. In particular, a 2016 case precedent effectively applying the APR dogma is explained that enables taking property away from owners without compensation. It has opened the way for massive value-destroying liquidations of economically productive and financially viable firms current on all obligations, as well as potentially other catastrophes.