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Claim Disabilities Rear Their Head in ‘KB Toys’

Sean O’Neal, a partner at Cleary Gottlieb Steen & Hamilton, and Mark Lightner, an associate with the firm, review a recent decision where the U.S. Bankruptcy Court for the District of Delaware waded into a debate among lower federal courts over whether a claim that is subject to disallowance under Bankruptcy Code §502(d) remains subject to disallowance after the claim is transferred to a purchaser.

A First-Anniversary Look at the Impact of ‘Stern v. Marshall’

Thompson Hine’s Barry Kazan and Jim Henderson write: In the year since ‘Stern’ was decided, courts have grappled with how broadly to read the decision while also addressing practical issues arising in bankruptcy cases. Courts finding that ‘Stern’ has a broad application focus on public/private rights analysis; courts with narrow interpretations focus on the conclusion of Roberts’ opinion: “[T]he question presented here is a ‘narrow’ one…[and] does not change all that much.”

Bankruptcy Sale ‘Free and Clear’ May Not Shield Against Successor Liability

Jerrold L. Bregman, Michael A. Cohen and Peter J. Buenger of Curtis, Mallet-Prevost, Colt & Mosle review a recent decision in which the Southern District held that principles of due process override provisions in a bankruptcy court’s order approving a sale, pursuant to Bankruptcy Code §363, that purported to insulate a purchaser from successor liability for future tort claims.

Analyzing Damages in Fraudulent Transfer Cases

David L. Barres, a member of Mintz Levin Cohn Ferris Glovsky and Popeo, writes: In my experience, trustees typically argue that a transferee’s liability under §550 is the full amount of the transfer. In my view, the correct result is the difference between the value of the consideration paid and the value of the consideration received, regardless of whether the claim is under federal or state law and regardless of whether the defendant took in good faith.