Disallowance Defense

News & Analysis as of

Clouds on the Horizon for Claim Purchasers in the Third Circuit

In a decision of significance to the distressed claims trading community, the US Court of Appeals for the Third Circuit in In re KB Toys Inc. recently held that any risk or “cloud” of disallowance under the Bankruptcy Code...more

Buyer Beware: Third Circuit Confirms Claims are Subject to Disallowance Despite Sale to Third Party

The Third Circuit in In re KB Toys, Inc. recently affirmed a decision of the Delaware District Court, holding that trade claims are subject to disallowance under section 502(d) of the Bankruptcy Code despite their subsequent...more

Caveat Emptor: Emerging Issues for Buyers of Bankruptcy Claims

In a large Chapter 11 bankruptcy case, claims against the debtor are actively traded in the secondary markets. A debtor’s original creditors may lack the liquidity to wait for uncertain payment at the end of the bankruptcy...more

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