In recent years, bankruptcy courts have come closer to reaching a consensus regarding their ability to recharacterize debt into equity. Yet, beneath this consensus lies a deepening divide that lenders should be aware of.
Recharacterization: The Debate
Historically, courts were divided as to whether bankruptcy courts had the power to recharacterize purported debt as equity. That debate has essentially ended and the general consensus is that bankruptcy courts can do so.
By
James B. Sowka And Steven SchwartzThis premium content is locked for The Bankruptcy Strategist subscribers only
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