Recently the U.S. Court of Appeals for the Fifth Circuit affirmed a decision of the U.S. Bankruptcy Court for the Southern District of Texas, which subordinated a claim of $2,742,114 on the ground that the claim “arose from” the rescission of a purchase or sale of a security under §510(b) of the Bankruptcy Code, 11 U.S.C. §510(b).1 SeaQuest Diving LP et al. v. S&J Diving Inc. (In re SeaQuest Diving LP), 2009 WL 2450680 (5th Cir. Aug. 12, 2009) (SeaQuest).
This is the most recent in a series of decisions rendered by the federal courts of appeals over the last several years to grapple with the application of §510(b) to a claim that does not readily fall within the statute’s language.
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