Status Quo: The Section 502(2) Divide

Law360, New York (March 15, 2010, 12:15 PM EDT) -- Courts continue to be divided over whether Bankruptcy Code section 502(2) can be used to disallow administrative expense claims held by defendants of an avoidance action.

In ASM Capital LP v. Ames Dept. Stores Inc.[1], the court held that section 502(d) cannot be used to bar administrative expense claims of defendants of avoidance actions, while the court in In re Circuit City [2] held that it can. The Supreme court of the United States recently declined the opportunity to resolve the issue once and for all....
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