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High Court Ruling Questions Ch. 11 'Insider' Status Test

Law360 (March 6, 2018, 7:05 PM EST) -- In ruling that appellate courts should defer to a bankruptcy court’s factual findings when hearing challenges over a creditor’s insider relationship to a debtor, the U.S. Supreme Court refused to endorse an “arm’s length” test used in bankruptcies, suggesting other evaluative standards may be better, according to experts.

On Monday, the high court unanimously affirmed in U.S. Bank NA v. The Village at Lakeridge LLC that the federal circuits should only review challenges over nonstatutory insider determinations in a Chapter 11 case for “clear error” instead...
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