How 9th Circ. Views The 'Substantive Consolidation' Debate

Law360 (December 4, 2019, 6:44 PM EST) -- This article discusses the disagreement among courts over whether the creditors of a nondebtor must be given advance notice of a motion to substantively consolidate the nondebtor with the bankruptcy estate of a debtor. In an apparent matter of first impression among the circuits, the U.S. Court of Appeals for the Ninth Circuit ruled in Leslie v. Mihranian[1] that such notice is required.

Substantive Consolidation

Substantive consolidation is an equitable remedy pursuant to which a bankruptcy court may order that the assets and liabilities (for ease of reference, the estates) of separate entities be treated as if they belonged to a...

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