Part Two of a Two-Part Article
Recharacterizing Debt
The first half of this article, which appeared in last month's issue, discussed the purpose and effect of recharacterization of debt to equity, distinguished recharacterziation from equitable subordination, and reviewed various approaches, including multi-factor tests, that different courts have employed in determining whether to recharacterize a claim in bankruptcy and non-bankruptcy contexts. This concluding installment explores further the Third Circuit Court of Appeals' decision in <i>In re SubMicron Systems Corporation, et al.</i>, 432 F.3d 448 (3d Cir. 2006) and discusses lessons learned from that case.
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