464
Stevens, J., dissenting
to their participation.1 As we have on two prior occasions,2 we granted certiorari in this case to decide whether 11 U. S. C. § 1129(b)(2)(B)(ii) of the 1978 Act preserved or repealed this "new value" component of the absolute priority rule. I believe the Court should now definitively resolve the question and state that a holder of a junior claim or interest does not receive property "on account of" such a claim when its participation in the plan is based on adequate new value.
The Court today wisely re jects the Government's "starchy" position that an old equity holder can never receive an interest in a reorganized venture as a result of a cram-down unless the creditors are first paid in full. Ante, at 451.3 Nevertheless, I find the Court's objections to the plan
1 As Justice Douglas explained in Case v. Los Angeles Lumber Products Co., 308 U. S. 106, 121-122 (1939) (footnote omitted):
"It is, of course, clear that there are circumstances under which stockholders may participate in a plan of reorganization of an insolvent debtor. This Court, as we have seen, indicated as much in Northern Pacific Ry. Co. v. Boyd[, 228 U. S. 482 (1913),] and Kansas City Terminal Ry. Co. v. Central Union Trust Co.[, 271 U. S. 445 (1926)]. Especially in the latter case did this Court stress the necessity, at times, of seeking new money 'essential to the success of the undertaking' from the old stockholders. Where that necessity exists and the old stockholders make a fresh contribution and receive in return a participation reasonably equivalent to their contribution, no objection can be made. . . .
"In view of these considerations we believe that to accord 'the creditor his full right of priority against the corporate assets' where the debtor is insolvent, the stockholder's participation must be based on a contribution in money or in money's worth, reasonably equivalent in view of all the circumstances to the participation of the stockholder."
2 See Norwest Bank Worthington v. Ahlers, 485 U. S. 197, 203, n. 3 (1988); U. S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U. S. 18 (1994).
3 As I noted earlier, see n. 1, supra, Justice Douglas made this proposition clear in Case v. Los Angeles, supra. Justice Douglas was a preeminent bankruptcy scholar, well known for his views on the dangers posed by management-controlled corporate reorganizations. Both his work on the Protective Committee Study for the Securities and Exchange Commis-
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