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Recharacterization: The Debate

Historically, courts were divided as to whether bankruptcy courts had the power to recharacterize purported debt as equity. That debate has essentially ended and the general consensus is that bankruptcy courts can do so.

26 minute read October 28, 2013 at 12:46 PM
By
James B. Sowka and Steven Schwartz
Recharacterization: The Debate

In recent years, bankruptcy courts have come closer to reaching a consensus regarding their ability to recharacterize debt into equity. Yet, beneath this consensus lies a deepening divide that lenders should be aware of.

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