New Value Exception to the Chapter 11 Absolute Priority Rule, The

The absolute priority rule, as codified in the 1978 Bankruptcy Code, provides that in certain circumstances junior claimants of a company involved in a Chapter 11 reorganization may not receive or retain any property under the reorganization plan. The new value exception to the Chapter 11 absolute priority rule allows a debtor\u27s owner to retain an interest in a business or property under certain circumstances, even if all senior claimants are not paid in full.\u27 However, there is currently a question as to whether the new value exception survived the enactment of the 1978 Bankruptcy Code.\u27 In Bonner Mall Partnership v. U.S. Bancorp Mortgage Co. (In re Bonner Mall Partnership),\u27the Ninth Circuit Court of Appeals considered this issue and determined that the exception still survives