Legal Dictionary of Pakistan

absolute-priority rule

Bankruptcy. The rule that a confirmable reorganization plan must provide for full payment to a class of dissenting unsecured creditors before a junior class of claimants will be allowed to receive or retain anything under the plan. 0 Some jurisdictions recognize an exception to this rule when a junior class member, usu. a partner or shareholder of the debtor, contributes new capital in exchange for an interest in the debtor. 11 USCA § 1129(b)(2)(B)(ii)