• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Harvard Law School Bankruptcy Roundtable

Harvard Law School Bankruptcy Roundtable

  • About Us
  • Coverage-in-Depth
    • Crypto-Bankruptcy
    • Purdue Pharma Bankruptcy
    • Texas Two-Step and the Future of Mass Tort Bankruptcy
  • Subscribe
  • Show Search
Hide Search

Buyer Beware: Courts Put Claims Trades Under a Microscope

By Rick Antonoff, Mark Pesso, Timothy Bennett and Leah Edelboim, Clifford Chance US LLP

Recent decisions on claims trading in bankruptcy cases further develop the Second Circuit’s seminal ruling in Dish Network Corp. v.  DBSD North America, Inc. that if the primary motive for a secondary market purchase of bankruptcy claims is control of the Chapter 11 process, cause may exist to “designate,” or not count, the votes cast by the purchasers in connection with a Chapter 11 plan.  Read together, these decisions demonstrate the willingness of courts to scrutinize secondary market claim transactions when determining disputes over classification, treatment and, ultimately, the value claims purchasers realize on account of purchased claims.

In our Client Memorandum we discuss four decisions issued in the last year as additional examples of courts examining claims transfers under a microscope.  A Third Circuit Court of Appeals decision affirmed that the purchaser of trade claims is subject to the defenses that a debtor would have against the original creditor.  In another case, the bankruptcy court permitted the debtor to treat a claim differently solely because the claim was assigned to a secondary market purchaser.  A Ninth Circuit appellate panel ruled that insider status does not travel with a claim that is assigned.  And finally, a court sustained a debtor’s objection to an assigned claim because the assignee was unable to produce sufficient evidence of its right to assert the claim.

These cases show that courts increasingly look into relationships between the parties and their respective motives when deciding how purchased claims are treated.  The full Client Memorandum is available for download here.

Written by:
Editor
Published on:
April 1, 2014
Thoughts:
No comments yet

Categories: Claims TradingTags: Claims Trading, Clifford Chance, Dish Network Corp, Leah Edelboim, Mark Pesso, Rick Antonoff, Timothy Bennett

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Categories

Recent Posts

Creditor Rights and Legal Transaction Costs

December 5, 2023

[Purdue Pharma Bankruptcy Series] Respondent Briefs (Respondent and pro-release parties)

November 28, 2023

[Purdue Pharma Bankruptcy Series] Petitioner Briefs (US Trustee and other anti-release parties)

November 21, 2023

View by Subject Matter

363 sales Anthony Casey Bankruptcy Bankruptcy administration Bankruptcy Courts Bankruptcy Reform Chapter 11 Chapter 15 Claims Trading Cleary Gottlieb Comparative Law COVID-19 cramdown David Skeel Derivatives DIP Financing Empirical FIBA Financial Crisis fraudulent transfer Jared A. Ellias Jevic Johnson & Johnson Jones Day Kenneth Ayotte Lehman LTL Management Mark G. Douglas Mark Roe Michael L. Cook plan confirmation Priority restructuring Safe Harbors Schulte Roth & Zabel Sovereign Debt SPOE Stephen Lubben Supreme Court syndicated Texas Two-Step Trust Indenture Act Valuation Weil Gotshal Workouts

Footer

Harvard Law School Bankruptcy Roundtable

1563 Massachusetts Ave,
Cambridge, MA 02138
Accessibility | Digital Accessibility | Harvard Law School

Copyright © 2023 The President and Fellows of Harvard College

Copyright © 2023 · Navigation Pro on Genesis Framework · WordPress · Log in