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Claim Can Be Subordinated Even if Assigned to a Third Party According to New ABI Poll

Contact: John Hartgen
             (703) 739-0800
             jhartgen@abiworld.org

 

CLAIM CAN BE SUBORDINATED EVEN IF ASSIGNED TO A THIRD PARTY, ACCORDING TO NEW ABI POLL

October 10, 2006, Alexandria, Va. —The large majority of respondents (83 percent) in a recent American Bankruptcy Institute online poll, citing In re Enron, agreed that a claim is subject to equitable subordination or total disallowance under §502 of the Code, even if it was assigned to a third-party transferee that was not involved in any misconduct committed by the original debt-holder. Fifty-nine percent of respondents “strongly agreed” and another 24 percent “somewhat agreed” that a claim can be affected by equitable subordination regardless of whether that claim was assigned to a third party not involved in the debt-holder’s misconduct.

Twelve percent disagreed with the effect on claims in §502 when misconduct is involved. Three percent of respondents “somewhat disagreed,” while 9 percent “strongly disagreed” that a claim is subject to equitable subordination or total disallowance under §502, even if the claim is assigned to a third-party transferee not involved in the original debt-holder’s wrongdoing.

ABI members and members of the public were welcome to submit their response to the statement: “A claim is subject to equitable subordination or total disallowance under §502, even if it is assigned to a third-party transferee who was not involved in any misconduct committed by the original holder of the debt (In re Enron).” The latest ABI Quick Poll that was open for voting from Sept. 29-Oct. 5.

ABI’s weekly Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

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