The ability of a bankruptcy court to reorder the priority of claims or interests by means of equitable subordination or recharacterization of debt as equity is generally recognized. Even so, the Bankruptcy Code itself expressly authorizes only the former of these two remedies.
Recharacterization: It's Not All About Equity or Insiders
In <i>Lothian Oil</i>, discussed herein, the Fifth Circuit considered for the first time whether a bankruptcy court has the power to recharacterize debt as equity.
By
Scott J. Friedman And Mark G. DouglasThis premium content is locked for The Bankruptcy Strategist subscribers only
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