Issue link: https://mbozikis.ufcontent.com/i/1422521
174 ambit of the fair and equitable rule. Subsequent to the approval of a gifting plan in the First Circuit case of In re SPM Manufacturing Corp., 984 F.2d 1305 (1st Cir. 1993), such plans became increasingly popular. However, both the Second Circuit (which includes New York) in DISH Network Corp. v. DBSD N. Am., Inc. (In re DBSD N. Am., Inc.), 634 F.3d 79 (2d Cir. 2011), and the Third Circuit (which includes Delaware) in In re Armstrong World Indus., Inc., 432 F.3d 507 (3d Cir. 2005), have issued rulings significantly restricting this doctrine going forward. 96 The Third Circuit has differentiated, however, the gifting of non-estate property and gifting outside of the plan process. See In re ICL Holding Co., Inc., 802 F.3d 547 (3d Cir. 2015) (finding that non- estate property could be gifted from secured creditors as 363 purchasers to junior creditors); In In re Jevic Holding Corp., 787 F.3d 173 (3d Cir. 2015), as amended (Aug. 18, 2015), reversed and remanded, 137 S.Ct. 973 (2017), the Third Circuit found that the "absolute priority" rule is not always implicated outside of the plan confirmation context or in the context of approving distributions outside of the Bankruptcy Code's distribution scheme under a settlement resulting in a structured dismissal. However, the Supreme Court reversed this decision, holding that a bankruptcy court may not approve a structured dismissal of a Chapter 11 case if the dismissal provides for distributions that do not follow the Bankruptcy Code's priority scheme without the consent of the bypassed classes. Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017). ii. New Value Exception In essence, the absolute priority rule requires that no junior class receive or retain any property under the proposed plan of reorganization unless all senior classes are paid in full. See Bank of N.Y. Trust Co., NA v. Official Unsecured Creditors' Comm. (In re Pac. Lumber Co.), 584 F.3d 229, 244 n.20 (5th Cir. 2009). 96 The Second Circuit invalidated gifting that violated the absolute priority rule under a plan by holding that secured creditors could not "surrender part of the value of the estate for distribution to the stockholder as a gift." In re DBSD N. Am., Inc., 634 F.3d 79, 99 (2d Cir.2011).