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?

21 Pages Posted: 22 Jul 2016

See all articles by Austin Murphy

Austin Murphy

Oakland University - School of Business Administration

Date Written: July 5, 2016

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.

Keywords: Bankruptcy, Absolute Priority Rule (APR), Law, 510(B), Shareholder Ownership Rights

JEL Classification: G33

Suggested Citation

Murphy, J. Austin, 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? (July 5, 2016). Available at SSRN: https://ssrn.com/abstract=2812645 or http://dx.doi.org/10.2139/ssrn.2812645

J. Austin Murphy (Contact Author)

Oakland University - School of Business Administration ( email )

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