Can a waiver of rights ever be beneficial to the person granting the waiver? Yes. In In re Adamson Apparel
, the Court of Appeals for the Ninth Circuit held, in a 2-1 opinion
, that waiving a right to indemnification on a guaranty may shield an insider guarantor from preference liability, when the insider guarantor “has a bona fide basis to waive his indemnification rights against the debtor in bankruptcy and takes no subsequent actions that would negate the economic impact of that waiver.” Not every court, however, agrees with this conclusion.
When the debtor, Adamson Apparel, Inc., a clothing manufacturer and retailer, obtained a loan from CIT Group Commercial Services, Inc., Arnold H. Simon, the debtor’s president and CEO, guaranteed the debt. Notably, the relevant agreements waived Simon’s right to indemnification from Adamson (i.e.
, the ability to seek reimbursement or any other form of payment from the debtor).