Beware The Constructive Trust Claim

Law360, New York (October 13, 2010, 12:12 PM EDT) -- Faced with the prospect of little recovery at some distant point in the future, larger unsecured creditors are using the remedy of a constructive trust to target specific property and to attempt to obtain a full recovery superior to all other claimants, including senior secured creditors.

Even if lacking in merit, the mere assertion of a constructive trust claim may prove to be an impediment in getting past an objection to plan confirmation based on the demand that the unresolved constructive trust claim be separately classified....
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