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A corporate chapter 11 case can result in a confi rmed plan of reorganization, a conversion to a chapter 7 liquidation, or dismissal of the case. The Bankruptcy Code provides specifi c priorities for the payment of claims in the fi rst two cases, while in the third, dismissal, the parties are typically returned to their prebankruptcy entitlements. The question in this case is whether a bankruptcy court can approve a litigation settlement between the debtor and some creditors in which the debtor’s assets are distributed in a manner that violates the statutory priorities that would apply under a confi rmed chapter 11 plan or chapter 7 liquidation.


Preview of United States Supreme Court Cases, Vol. 44, Issue 3 (November 28, 2016), pp. 98-[ii]