Good Tidings For Claims Traders: Second Circuit Rules That Purchased Administrative Claims Not Disallowed By Operation Of Section 502(D).
Mondaq Business Briefing › Nbr. 2010, January 2010
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Good Tidings For Claims Traders: Second Circuit Rules That Purchased Administrative Claims Not Disallowed By Operation Of Section 502(D).
Participants in the multibillion-dollar market for distressed claims and securities had ample reason to keep a watchful eye on developments in the bankruptcy courts during each of the last four years. Controversial rulings handed down in 2005 and 2006 by the bankruptcy court overseeing the chapter 11 cases of failed energy broker Enron Corporation and its affiliates had traders scrambling for cover due to the potential for acquired claims/debt to be equitably subordinated or even disallowed, based upon the seller's misconduct. The decisions had players in the distressed-securities market rushing to devise better ways to limit their exposure by building stronger indemnification clauses into claims-transfer agreements.
The rulings' "buyer beware" approach, moreover, was greeted by a storm of criticism from lenders and traders alike, including the ...See the full content of this document
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