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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.

25 minute read October 20, 2011 at 04:35 PM
By
Scott J. Friedman and Mark G. Douglas
Recharacterization: It's Not All About Equity or Insiders

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.

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