The Risk Of Equitable Subordination, Post-Enron

Law360, New York (November 24, 2008, 12:00 AM EST) -- In November of 2005, the distressed debt industry was shaken by a decision rendered by Bankruptcy Judge Arthur J. Gonzalez in the Enron proceeding. In re Enron, Case No. 01-1034, 2005 WL 3832053 (Bankr. S.D.N.Y. 2005) (hereafter “Enron I”).

Judge Gonzalez held that a claim purchased by an innocent transferee could still be subjected to equitable subordination based on the conduct of the transferor. Id. at *1.

The Enron I decision affirmed that (i) distressed debt purchasers did not acquire claims free and clear of any...
To view the full article, register now.
Law360 Pro Say Podcast
Check out Law360's new podcast, Pro Say, which offers a weekly recap of both the biggest stories and hidden gems from the world of law.