Clifford Chance

Buyer Beware: Courts Put Claims Trades Under a Microscope

31 January 2014

In a previous alert we summarized decisions addressing the issue of vote designation in bankruptcy in the wake of the Second Circuit's decision in the seminal case Dish Network Corp. v. DBSD North America, Inc. We noted that this line of cases indicates that if a court determines the primary motivation behind a secondary market purchase of bankruptcy claims is to obtain control of the underlying Chapter 11 process, that may constitute cause to "designate," or not count, the votes cast by the purchasers in connection with a Chapter 11 plan.

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