Buying and Selling Claims in Bankruptcy Issues and Pitfalls
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Learn the techniques to provide protections and avoid pitfalls affecting the value of traded claims.
This topic will explore the current state of the statutory law and judicial decisions affecting claims trading and suggest drafting techniques to provide protections and avoid pitfalls affecting the value of traded claims. This information is useful for both starting attorneys and experienced practitioners.
AuthorsDennis J. Drebsky, Nixon Peabody LLP Daniel W. Sklar, Nixon Peabody LLP
The Mechanics of Claims Trading
• Pre-1991 Issues
• Rule 3001 Requirements for Buyers and Sellers
• Documentation Required
Participants in Claims Trading
• Value Buyers
• Strategic Buyers
Arguments for and Against Permitting Claims Trading
• Does Vibrant Claims Trading Process Aid Bankruptcy Process or Complicate Consensual Resolutions?
Pitfalls to Be Avoided
• Bad Faith Finding May Lead Court to Disqualify Purchaser From Voting on a Plan
• The Enron II Decision and Pointers on How to Avoid Its Holding
• Impact of Contrasting KB Toys Decision in Third Circuit. 2013 WL 6038248 (3rd Cir. 2013) to Enron II.
• Drafting the Appropriate Trading Contract to Obviate Uncertainty
Recent Recommendations of American Bankruptcy Institute Relating to Claims Trading