Creditor's Attempt To Block Ch. 11 Wasn't Bad Faith: 9th Circ.

Law360 (June 5, 2018, 6:03 PM EDT) -- The Ninth Circuit on Monday reversed a bankruptcy court's ruling that a creditor acted in bad faith when it purchased some unsecured claims solely to block a restructuring plan, finding that a creditor can purchase claims to protect its own existing claim and that by itself doesn’t constitute bad faith.

A unanimous three-judge panel held that the lower court got it wrong when it refused to count Pacific Western Bank’s votes against Fagerdala USA’s restructuring plan after the bank purchased a portion of unsecured claims. The panel held that the bank didn’t do anything wrong when it purchased some claims to...

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