Bank of America Nat. Trust and Sav. Assn. v. 203 North LaSalle Street Partnership

Infobox SCOTUS case
Litigants = Bank of America Nat. Trust and Sav. Ass’n v. 203 North LaSalle Street P’ship
ArgueDate = November 2
ArgueYear = 1998
DecideDate = May 3
DecideYear = 1999
FullName = Bank of America National Trust and Savings Association
v.
203 North LaSalle Street Partnership
USVol = 526
USPage = 434
Citation =
Prior =
Subsequent =
Holding = A debtor's prebankruptcy equity holders may not, over the objection of a senior class of impaired creditors, contribute new capital and receive ownership interests in the reorganized entity, when that opportunity is given exclusively to the old equity holders under a plan adopted without consideration of alternatives.
SCOTUS = 1994-2005
Majority = Souter
JoinMajority = Rehnquist, O'Connor, Kennedy, Ginsburg, Breyer
Concurrence = Thomas
JoinConcurrence = Scalia
Dissent = Stevens
LawsApplied =

"Bank of America National Trust and Sav. Ass’n v. 203 North LaSalle Street P’ship", 526 U.S. 434 (1999), was a decision by the United States Supreme Court.

Pre-bankruptcy equity holders may not, over the objection of a senior class of impaired creditors in a Chapter 11 plan, contribute new capital and receive ownership interests in a reorganized entity, when the opportunity is given only to the old equity holders under a plan adopted without consideration of alternatives. Rather, in order not to violate the absolute priority rule, a plan conferring an interest to old equity must extend an opportunity to others who may compete for the equity (e.g. at auction) or who may propose a competing reorganization plan.

Cramdown is barred if a junior interest (old equity) holder under a proposed Chapter 11 plan receives or retains property “on account of” such junior interest. 11 U.S.C. 1129(b)(2)(B). The Court, considering whether the language of the statute implied a new value exception, found “on account of” not to mean “in exchange for” or “in satisfaction of” but rather should be interpreted to mean “because of.” Therefore, the absolute priority rule is triggered by a causal relationship between holding the prior claim or interest and receiving or retaining property. The Court neither decided whether the statute included a new value exception, nor decided whether the exception exists at all.

ee also

* List of United States Supreme Court cases, volume 526

Further reading

* cite journal | last = Hamilton | first = Megan | authorlink = | coauthors = | year = | month = | title = Absolute Priority Rule and New Value: Before and after "Bank of America National Trust and Savings Association v. 203 North LaSalle Street Partnership" | journal = Commercial Law Journal | volume = 105 | issue = | pages = 331 | issn = 1833-9506 | url = | accessdate = | quote =