Rudolph J. DiMassa Jr. and Keri L. Wintle of Duane Morris.
In a decision recently issued by the U.S. Bankruptcy Court for the Northern District of Illinois, In re Argon Credit, No.16-bk-39654 (Bankr. N.D. Ill. Jan. 10, 2019), the court held that standby limitation provisions in subordination agreements prevented the subordinated lenders from pursuing discovery on the senior lender’s claim, as the subordination agreement in question was enforceable under 11 U.S.C. Section 510(a) and applicable nonbankruptcy law.
Background
Argon Credit and Argon X (Argon) each filed voluntary Chapter 11 bankruptcy petitions in December 2016. Their jointly-administered cases were converted to ones under Chapter 7 just one month later, upon the motion of Fund Recovery Services (FRS), a secured creditor.
