absolute priority rule
Noun
A rule invoked by a bankruptcy court during the liquidation of the assets of a business, especially when the business files a bankruptcy petition that calls for absolute priority of senior creditors, where their claims are settled to the satisfaction of the bankruptcy court before the claims of any junior creditors and others investors.
Comment:
The rule arises when a court confirms a plan over the objections of a class of other creditors that the plan is not fair and equitable.
