Absolute Priority Rule and the Family Farmer - Setting a Farm Debtor's Priorities Straight: Norwest Bank Worthington v. Ahlers, The
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Authors
Fuhrman, Lori L.
Issue Date
1989
Volume
22
Issue
Type
Journal Article
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Abstract
INTRODUCTION|In Norwest Bank Worthsngton v. Ahlers, the United States Supreme Court sounded a warning to the nation's financially ailing family farmers. In overruling the decision of the United States Court of Appeals for the Eighth Circuit, the Court held that the reorganization plan filed by a family farm debtor could not be confirmed over the objections of the debtor's unsecured creditors because the plan allowed the debtor to retain an interest m the reorganized farm m violation of the absolute priority rule. The only judicially recognized exception to the absolute priority rule is when a debtor provides consideration in "money or money's worth" in exchange for participation in the reorganizaton plan. The Court held that the farmer's promise of future labor and expertise did not constitute consideration in the form of "money or money's worth." As a result, the opportunity for family farmers to confirm a Chapter 11 reorganization plan under 11 U.S.C. Section 1101-74 ("Chapter 11") using the Eighth Circuit's liberal construction of the exception to the absolute priority rule is no longer available...
Description
Citation
22 Creighton L. Rev. 139 (1988-1989)
Publisher
Creighton University School of Law