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Enron: Court’s Ruling On Inequitable Conduct May Affect Claims Trading Market

Law360 (March 3, 2006, 12:00 AM EST) -- In a decision that may dramatically affect the claims trading market, New York Bankruptcy Judge Arthur Gonzales ruled in the Enron case that a transferred claim can be subordinated based upon the transferring creditor’s inequitable conduct. The holding means that any subsequent transferee of a claim is subject to later attack and subordination of the claim, regardless of whether that transferee had any knowledge of the initial transferor’s inequitable conduct.

* The Enron Decision and Analysis of the Decision *

The Enron decision involved Enron’s pre-petition...
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