DIP Financing Agreement Initially Rejected as Sub Rosa Chapter 11 Plan | Jones Day
To embed, copy and paste the code into your website or blog: Postpetition financing provided by pre-bankruptcy shareholders or other "insiders" is not uncommon in chapter 11 cases as a way to fund a plan of reorganization and allow old shareholders to retain an ownership interest in the reorganized entity. The practice is typically sanctioned by bankruptcy courts under an exception—the "new value" exception—to the "absolute priority rule," which prohibits shareholders and junior creditors from receiving any distribution under a plan on account of their interests or claims unless senior cr...
Source: jdsupra.com