In a decision with significant implications for investors and underwriters alike, the Court of Appeals for the Second Circuit has held that contribution claims arising from the purchase and sale of a security of an affiliate of the debtor can and should be subordinated under section 51

“‘Two roads diverged in the woods and I took the road less traveled’ [sic] … and it hurt, man! Not cool, Robert Frost! … But what if there really were two paths?  I want to be on the one that leads to awesome.”
– Kid President (Robby Novak)

“Round and around and around and around we go // Oh now tell me, now tell me, now tell me now you know // … It takes me all the way // I want [to extend the automatic] stay” – Rihanna (as modified)

For those readers who have a sophisticated understanding of bankruptcy law, the holdings of Jester v. Wells Fargo Bank, N.A. (In re Jester) will not be surprising.

There are no secrets in bankruptcy, or at least only in very limited circumstances, according to a recent decision in 

“Who by water and who by fire, who by sword and who by beast, who by famine and who by thirst, who by [bankruptcy courts deciding matters that are outside their constitutional authority]”
– Rosh Hashanah liturgy, as modified

Here, at the Bankruptcy Blog, we are committed to keeping you up to speed on the current state of bankruptcy law. Today’s post provides readers with an update to a decision by the United States Bankruptcy Court for the District of Delaware, which considered whether the debtors were required to assume a bundle of related agreements as one executory contract, or whether the debtors could assume only those agreements that contained provisions most favorable to their ongoing operations.

Seeking to recharacterize a debt claim as an equity contribution to the debtor through the equitable powers of the bankruptcy court (something we’ve written about quite a bit in our blog) is one way to reduce creditor claims against the bankruptcy estate, but only in certain circuits.

Overview

With data privacy issues constantly in the news, what do businesses need to know about handling personal information when they’re considering bankruptcy, especially if some personal information – like customer records – may be a valuable asset?