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Buyer Beware: Your New Claim May Carry Hidden Baggage

Two recent decisions issued in the bankruptcy proceedings of Enron Corp., et al., highlight - and threaten to expand considerably - the risks facing purchasers of claims against a debtor. These include (i) the risk that the claims held by an innocent third party purchaser will be subordinated under Section 510(c) of the Bankruptcy Code and (ii) the risk that such claims will be disallowed under Section 502(d) of the Code.

This article will focus on the second decision.

Walter H. Curchack is the chair of Loeb & Loeb LLP's Bankruptcy, Restructuring and Creditors' Rights Practice Group. He is based in the New York office..

This article first appeared in Financier Worldwide's Americas Restructuring & Insolvency Review 2007. Copyright 2007 Financier Worldwide Limited. Permission to use this reprint has been granted by the publisher.