Article

Priority in Going-Concern Surplus

There is a debate about whether a corporate debtor’s going-concern surplus over liquidation value, preserved by the bankruptcy process, should be distributed entirely to senior claims that are not paid in full or should, instead, be shared to some extent with junior claims. To protect the advantages of priority credit for debtors, this debate should be resolved in favor of the senior claims unless the junior claims are nonconsensual.

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