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Bankruptcy Court Order in the Enron Corp. Case Overturned

September 05, 2007

By Thomas L. Kent and Mary P. Miras

In a decision that should allay certain Wall Street concerns regarding the trading of claims, including bank debt, in the secondary market, Judge Shira Scheindlin of the United States District Court for the Southern District of New York recently overturned a bankruptcy courts order in the Enron Corp. case and held that transferees are not necessarily subject to the equitable subordination and/or disallowance of their claims solely due to the prior inequitable conduct of their transferor.

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