January 15, 2016

Trustee Settlement of SEC Claim Approved Over Creditor Objections

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.

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