It is generally recognized that a bankruptcy court has the power—either equitable or statutory—to recharacterize a purported debt as equity if the substance of the transaction belies the labels the parties have given it. A...more
In In re SGK Ventures, LLC, Case No. 15 C 11224, 2017 WL 2683686 (N.D. Ill. June 20, 2017), Judge Durkin of the District Court for the Northern District of Illinois sets out a thorough analysis for addressing...more
Venture capitalists (“VCs”) often provide needed debt financing such as bridge loans to emerging companies in financial distress. However, given their insider status with these companies, VCs may encounter issues with such...more
In that case, Walnut Creek Mining Company (“Walnut Creek”), the debtor Optim Energy’s largest unsecured creditor, sought standing to pursue recharacterization, equitable subordination, and fiduciary duty claims on behalf of...more