Official Comm. of Unsecured Creditors v. Halifax Fund LP (In re AppliedTheory Corp.)
Jul
09
2007
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.
Procedural posture
Appellant committee of unsecured creditors (committee) sought authorization to assert a claim of equitable subordination under 11 U.S.C. § 510(c) against various lenders. The chapter 11 trustee investigated the claim and concluded it lacked merit. The bankruptcy court denied the committee permission to pursue the claim. The District Court for the Southern District of New York affirmed the bankruptcy court's order. The committee appealed.
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National Emergency Servs. v. Williams
Jun
19
2007
Ruling
Court could not exercise equitable subordination of claim in case where there was to be no distribution of assets.
Procedural posture
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.
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Court
:
- 11 U.S.C.
In re Insilco Techs. Inc.
Mar
20
2007
Ruling
Terms of settlement agreement conceding that debts owed to non-participating lenders were allowable claims barred trustee's action for recharacterization and equitable subordination.
Procedural posture
Appellant trustee appealed from the District Court for the District of Delaware which dismissed the trustee's objections to a proof of claim. The appeal arose out of the 11 U.S.C. § 502 claim allowance process in debtor's chapter 11 bankruptcy liquidation and the question was whether the trustee could bring a recharacterization action and an equitable subordination action under 11 U.S.C. § 510(c)(1) against certain lenders.
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Henry v. Lehman Comml Paper Inc. (In re First Alliance Mortgage Co.)
Dec
08
2006
Ruling
Corporation's aiding and abetting fraud by lender did not justify equitable subordination of its claims in lender's bankruptcy.
Procedural posture
In two consolidated actions, the District Court for the Central District of California found defendant corporation liable under California tort law to a class of borrowers for aiding and abetting fraud, and in a bankruptcy trustee's action, the district judge concluded that the corporation's conduct pursuant to its relationship with the bankrupt company did not warrant relief under the equitable principles of bankruptcy laws.
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Salkin v. Chira (In re Chira)
Nov
16
2006
Ruling
Claims of involuntary debtor's former spouse and spouse's mortgagee brother allowed but equitably subordinated.
Procedural posture
Plaintiff, trustee for ex-husband debtor, brought an adversary proceeding against eight defendants, i.e., those who claimed an interest in certain real property, to determine the validity, priority, and amount of deeds made and obligations incurred by debtor. After a series of partial summary judgments, three defendants remained in litigation. The matter was pending decision following trial on issues between the trustee and remaining defendants.
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Court
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Mid City Bank v. Downey Land Ltd.
Nov
16
2006
Ruling
Lessor who allegedly misrepresented condition of health club purchased by debtor did not owe any duty to financing bank and its claim was not subject to equitable subordination.
Procedural posture
Plaintiff bank filed a motion for summary judgment in its action against defendant lessor, which sought equitable subordination of the lessor's claim against chapter 7 debtor pursuant to 11 U.S.C. § 510(c). The lessor also filed a motion for summary judgment, claiming that it could not have breached a duty which would have given rise to a cause of action for equitable subordination, and that it was not liable for fraud or misrepresentation.
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Court
:
Logan County Copperative v. Gaites (In re Gaites)
Jul
27
2006
Ruling
Bank was denied partial summary judgment in equitable subordination action since factual disputes existed.
Procedural posture
Defendant bank filed a motion for partial summary judgment on plaintiff co- op's adversary complaint for equitable subordination under 11 U.S.C. § 510(c).
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Court
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LWD Trucking Inc. v. LWD Inc. (In re LWD Inc.)
Jun
06
2006
Ruling
Bankrtuptcy court declined to strike complaint in equitable subordination proceeding that put debtor sufficiently on notice of claims.
Procedural posture
Plaintiff United States Trustee brought an adversary complaint against defendant individuals and company, alleging, inter alia, equitable subordination and seeking payment of the trustee's fees. Defendants moved to dismiss the complaint.
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Court
:
- 11 U.S.C.
Bala v. Kaler (In re Racing Servs.)
Apr
04
2006
Ruling
Court affirmed the bankruptcy court's order that equitably subordinated an application for unpaid postpetition rent to all other allowed claims including criminal judgments involving inequitable conduct that injured creditors.
Procedural posture
Appellant claimant sought review of a decision of the Bankruptcy Court for the District of North Dakota, which ordered that the claimant's administrative expense claim against the bankruptcy estate of appellee debtor for postpetition rent be subordinated to all other allowed claims.
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In re Kreisler
Oct
04
2005
Ruling
Creditor's secured claim was deemed allowed but subject to equitable subordination due to creditor insider's inequitable conduct.
Procedural posture
The creditor filed a motion to have its secured claim deemed allowed. The trustee objected to the claim.
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Court
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