BANKRUPTCY AND RESTRUCTURING CLIENT ALERT: The Second Circuit Condemns Chapter 11 Plan “Gifting”

    10 February 2011
    The United States Court of Appeals for the Second Circuit held on February 7, 2011, in DISH Network Corporation v. DBSD North America, Incorporated that a so-called “gifting” plan, pursuant to which a senior creditor “gifts” a portion of its undisputed bankruptcy recoveries/distributions to a junior class of creditors or equity holders, skipping an intermediate objecting class, is prohibited by the absolute priority rule.