Abstract
This Note analyzes the usefulness and viability of the new value exception to the absolute priority rule. The first section details the historical development of the absolute priority rule as well as the origin and purpose of the rule's new value exception. Next, this Note addresses the ambiguity in the Supreme Court's dicta in Norwest Bank Worthington v. Ahlers regarding whether the new value exception to the absolute priority rule survived the 1978 Bankruptcy Reform Act and the subsequent failure of some lower courts to recognize the retention of the new value exception. However, in Dewsnup v. Timms, the United States Supreme Court propounded language which supports continued viability of the new value exception. This Note concludes that the Dewsnup decision, the legislative history of the absolute priority rule, and practical considerations of Chapter 11 reorganizations mandate recognition of the new value exception to the absolute priority rule under the 1978 Code.
How to Cite
35 Ariz. L. Rev. 489 (1993)
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