On Feb. 7, 2011, the United States Court of Appeals for the Second Circuit issued an opinion (In re DBSD North America, Incorporated, No. 10-1352) where the majority held, among other things, that a plan of reorganization violated the absolute priority rule of ' 1129(b)(2)(B) of the Bankruptcy Code where the holders of second-lien debt agreed to voluntarily gift shares and warrants to existing shareholders while the holders of general unsecured claims did not receive full payment of their claims.
Gift Plans: Death Knell or Still on Life Support?
This article focuses on whether an out-of-the-money unsecured creditor with an unliquidated claim has standing to object to a gift plan.
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