• The Absolute Priority Rule and Gifting Plans in the Second Circuit: The Gift that Stopped Giving
  • February 16, 2011 | Author: Kevin P. Garland
  • Law Firm: Greenberg Traurig, LLP - Santa Monica Office
  • On February 7, 2011, in In re DBSD North America, Inc., the Court of Appeals for the Second Circuit released its opinion joining the Third Circuit in condemning socalled “gifting plans,” thus deepening the perceived circuit split with the First Circuit which has been interpreted as approving of gifting plans. In so doing, the Second Circuit relied on the U.S. Supreme Court cases of Bank of Am. Nat’l Trust & Sav. Ass’n v. 203 N. LaSalle St. P’ship and Norwest Bank Worthington v. Ahlers as support for a strict interpretation of the absolute priority rule whereby no “existing shareholder [may] receive[] ‘property’. . .‘under the plan’. . .‘on account of’ its prior, junior interest.”