May
13
2009
Official Comm. of Unsecured Creditors v. Suisse (In re Yellowstone Mt. Club LLC)
Defendants, the unsecured creditors' committee and other creditors, moved to have the rights of the principal secured creditor and its secured claim of $232 million equitably subordinated, pursuant to 11 U.S.C.S. § 510(c), The court entered an abbreviated and limited interim ruling for purposes of facilitating the upcoming auction of the debtors' assets.
Ruling:
Secured creditor's claim equitably subordinated on basis of overreaching and predatory lending practices.
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Commercial case opionion summary, case decided on May 13,2009, LexisNexis #0909-083
Apr
02
2009
Cadleway Props. V. Andrews (In re Andrews)
Plaintiff creditor filed an adversary proceeding against defendant, the wife of a chapter 7 debtor, seeking an order under 11 U.S.C.S. § 510(c) which subordinated a claim the wife filed against her husband's bankruptcy estate to claims filed by other creditors. The bankruptcy court issued an order that subordinated the wife's claim, and the wife appealed. The district court reversed the bankruptcy court's order and remanded the case.
Ruling:
Creditor's subrogation claim against debtor's spouse rendered moot by consummation of settlement agreement.
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Consumer case opionion summary, case decided on April 02,2009, LexisNexis #0709-028
Feb
26
2009
Plaza Equities LLC v. Panker (In re Copperfield Invs. LLC)
A chapter 11 trustee filed a motion under Fed. R. Bankr. P. 9019 to approve a settlement agreement with a creditor. A group of entities holding the largest claims against the estate (entities) conditionally objected to the approval of the settlement. The entities contended that the settlement was only appropriate if the chapter 11 plan was confirmed.
Ruling:
Settlement of dispute over debtor's interest in mortgages approved.
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Commercial case opionion summary, case decided on February 26,2009, LexisNexis #0509-113
Nov
18
2008
In re Patriot Aviation Servs.
The official committee of unsecured creditors for a chapter 11 debtor filed a motion for partial summary judgment on its objection to a claim of an aborted securities purchaser. The committee sought to subordinate the claim to the claims of general unsecured creditors pursuant to 11 U.S.C.S. § 510(b).
Ruling:
Alternative transaction fee due on aborted securities transaction was only subject to subordination to secured claims.
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Commercial case opionion summary, case decided on November 18,2008, LexisNexis #1208-114
Jun
20
2008
SI Restructuring Inc. v. Faulkner (In re SI Restructuring Inc.)
Appellants sought review of an order of the District Court for the Western District of Texas, San Antonio Division, affirming a bankruptcy court's order invoking equitable subordination pursuant to 11 U.S.C.S. § 510(c), which effectively converted secured claims filed by appellants to unsecured claims for the purpose of any distributions.
Ruling:
Equitable subordination of secured claims reversed.
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Commercial case opionion summary, case decided on June 20,2008, LexisNexis #0708-099
Apr
25
2008
Kaler v. Bala (In re Racing Servs.)
Appellants, the chapter 7 trustee and the State of North Dakota, challenged a ruling of the Bankruptcy Court for the District of North Dakota granting a motion to vacate part of an order that had equitably subordinated the claims of appellee, the former founder and CEO of debtor, as permitted by 11 U.S.C.S. § 510. Both appellants had unsuccessfully objected to the motion to vacate.
Ruling:
Bankruptcy court did not abuse discretion in partially vacating order for equitable subordination of claims by debtor's founder and former CEO.
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Commercial case opionion summary, case decided on April 25,2008, LexisNexis #0508-080
Jan
09
2008
In re NationsRent Inc.
The unsecured creditors liquidating trust sought an order approving an initial distribution to the general unsecured creditors. The trust held approximately $19.37 million in cash and sought to make an initial distribution of $19 million. Objections to the order of distribution questioned whether the senior notes held by sellers of assets to the debtors were subordinated to the make-whole sale claims and the assignee of claims.
Ruling:
Creditors holding make whole sale claims were entitled to priority over senior note holders'claims.
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Commercial case opionion summary, case decided on January 09,2008, LexisNexis #0208-094
Aug
15
2007
Margaret B. McGimsey Trust v. USA Capital Diversified Trust Deed Fund LLC (In re Consumer USA Comml Mtg. Corp.)
Appellant members sought review of a decision of the Bankruptcy Court for the District of Nevada, which sustained the objection of appellee committee and disallowed the members' proofs of claim for breach of contract and fraud relating to their purchase of their membership interests in the debtor.
Ruling:
Proofs of claim for breach of contract and fraud relating to purchase of memebrship interests in debtor subordinated to those of equity holders.
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Commercial case opionion summary, case decided on August 15,2007, LexisNexis #1207-006
Jul
09
2007
Official Comm. of Unsecured Creditors v. Halifax Fund LP (In re AppliedTheory Corp.)
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Ruling:
Committee's request for leave to pursue equitable subordination denied as not in best interests of estate and not necessary for fair and efficient resolution.
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Court: 2nd Circuit ( ) [ Circuit Court ]
Jun
19
2007
National Emergency Servs. v. Williams
Appellant filed an adversary complaint to subordinate claim under 11 U.S.C. § 510(c) in the bankruptcy court. Appellee moved to dismiss the adversary complaint. The chapter 11 trustee and debtor had agreed the bankruptcy case should be dismissed once the instant case concluded. The bankruptcy court dismissed appellant's complaint for failure to state a cause of action. Appellant filed an appeal.
Ruling:
Court could not exercise equitable subordination of claim in case where there was to be no distribution of assets.
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