medium · Corporate Credit Analysis distressed
Under the Absolute Priority Rule, what is the 'Absolute' part of the rule referring to?
- The requirement that the CEO must retain 'absolute', fully unchecked power over every major financial decision.
- The fact that the company's remaining assets must always be liquidated for their single absolute maximum market value possible.
- The strict requirement that priority levels cannot be skipped or violated without the consent of the impaired senior classes.
- The rule requiring that every impaired creditor must receive an 'absolute' all-cash recovery, with no stock, warrants, or other property.
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