Insider's New Investment Subject to Market Competition Test

In her Distress Mergers & Acquisitions column, Jones Day partner Corinne Ball analyzes a Seventh Circuit decision from earlier this month mandating that insider-investors under a Chapter 11 plan poised to gain control of the reorganized debtor must be subject to the same competitive bidding requirements applicable to the old "out of the money" equity, clearly rejecting the argument that the debtors' exclusive right to propose a plan gave the debtor an unfettered right to choose which new investment to accept.

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