Much ado about nothing: Absolute priority deviations in Chapter 11

Several empirical studies interpret absolute priority in bankruptcy law in a way that has never been bankruptcy law. Failure to disclose this to readers unfamiliar with bankruptcy is misreading. Enumerating the frequency of ''deviations'' from contractual priority in bankruptcy proceedings can create the impression that bankruptcy courts fail to enforce appropriate laws. We show that bankruptcy courts do enforce contractual priority subject to I) bifurcation of secured claims and 2) the mandated power of creditors to waive priority rights. We discuss this priority rule and the role it prays in Chapter Il proceedings, and other forms of priority.