MFA Submits Amicus on the Significance of the “Absolute Priority” Rule

MFA and LSTA filed an amicus brief in the Bank Lender Group v. W.R. Grace & Co., et al. case before the U.S. Court of Appeals for the Third Circuit.  The brief discusses and provides background on the most fundamental principle of corporate reorganization law—the so-called “absolute priority” rule—providing that creditors must be paid in full before shareholders may retain any value.  We argue that W.R. Grace’s plan is not fair and equitable; and that if allowed to stand, it will have detrimental consequences for the corporate loan market.