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Bankruptcy Litigation

Bankruptcy Code Section 502(d) Claim Disallowance Issues ‘Travel With’ the Claim

In a recent decision, the U.S. Bankruptcy Court for the Southern District of New York held that claim disallowance issues under Section 502(d) of the Bankruptcy Code “travel with” the claim, and not with the claimant.

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In a recent decision, the U.S. Bankruptcy Court for the Southern District of New York held that claim disallowance issues under Section 502(d) of the Bankruptcy Code “travel with” the claim, and not with the claimant. Declining to follow a published district court decision from the same federal district, the bankruptcy court found that section 502(d) applies to disallow a transferred claim regardless of whether the transferee acquired its claim through an assignment or an outright sale. See, In re Firestar Diamond, 615 B.R. 161 (Bankr. S.D.N.Y. 2020).

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