June 07, 2021

Deeply Subordinated Creditor Lacks Standing to Participate in Plan Confirmation

Faegre Drinker co-chair Andrew Kassner and counsel Joseph Argentina coauthored an article for The Legal Intelligencer, titled “Deeply Subordinated Creditor Lacks Standing to Participate in Plan Confirmation.”

The authors outlined a case where deeply subordinated junior creditors sought to assert claims and participate in the plan confirmation process. Ultimately, the U.S. Bankruptcy Court for the District of Kansas ruled that the provisions in the subordination agreements, which provided for the transfer of subordinated creditors’ bankruptcy voting rights, were unenforceable. However, the court also held that because they were out of money, the subordinated creditors did not have the standing to object to the plan.

Kassner and Argentina emphasized how, based on the court’s decision, practitioners should analyze “whether the subordinated creditor will receive any distribution as a result of the subordination of its claim in deciding how and whether it can advance positions in a Chapter 11 case.”

The full article is available for The Legal Intelligencer subscribers.

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