Bankruptcy Claim Buyers Must Guard Against Counterclaims

Law360, New York (February 5, 2014, 4:43 PM EST) -- A creditor's claim in bankruptcy may be subject to certain counterclaims and/or defenses that include either disallowance of the claim in whole or in part based on the creditor's failure to repay property recoverable by the estate under Section 502(d) of the Bankruptcy Code, or subordination of the claim based on the creditor's inequitable conduct under Section 510(c).

It is important for any potential acquirer of a claim to investigate whether the claim it seeks to acquire may be subject to these defenses and to factor...
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