Rombro v. Dufrayne (In re Med Diversified Inc.)
Aug
26
2006
Ruling
Claim based on termination agreement with debtor providing for exchange of prime stock for debtor's common stock was subject to equitable subordination.
Procedural posture
In a debtor's chapter 11 proceeding, appellant creditor filed a proof of claim based on his termination agreement with the debtor. Appellee trustee filed a complaint against the creditor alleging that his claim was subject to mandatory subordination under 11 U.S.C. § 510(b). The bankruptcy court granted summary judgment for the trustee, and the District Court for the Eastern District of New York affirmed. The creditor appealed.
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