Equity security holders^[2] or investors ^[3] (“Equity Holders”) in debtor entities are usually

subordinated to creditors’ claims in bankruptcy cases.^[4] This need not always be the case.

Two conditions exist where Equity Holders’ claims may be equal or superior to general

unsecured creditors’ claims. The first are claims based on “fraudulent retention” (“Fraudulent
Retention Claims”). The second are claims based on debtors’ post-petition interfering with
Equity Holder’s rights to sell their investment, to benefit the debtors’ reorganization effort
(“Freeze Claims”).

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