The absolute priority rule, as codified in the 1978 Bankruptcy Code, provides that in certain circumstances junior claimants of a company involved in a Chapter 11 reorganization may not receive or retain any property under the reorganization plan. The new value exception to the Chapter 11 absolute priority rule allows a debtor's owner to retain an interest in a business or property under certain circumstances, even if all senior claimants are not paid in full.' However, there is currently a question as to whether the new value exception survived the enactment of the 1978 Bankruptcy Code.' In Bonner Mall Partnership v. U.S. Bancorp Mortgage Co. (In re Bonner Mall Partnership),'the Ninth Circuit Court of Appeals considered this issue and determined that the exception still survives.

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