In reorganizations, the absolute priority rule generally holds, but in liquidations under Chapter 11, it is often violated.

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In reorganizations under Chapter 11, the absolute priority rule generally holds, ensuring that senior creditors are paid before junior creditors. In liquidations, assets are distributed according to the priority of claims, but Chapter 11 is primarily about reorganization, not liquidation.

In Reorganizations, the Absolute Priority Rule Generally Holds, but in Liquidations