Mr Daniel J Merrett

Daniel J Merrett


Insolvency & Restructuring

Another bankruptcy court rules that a traded claim can be disallowed if the seller received a voidable transfer
USA | 06 November 2020

The US Bankruptcy Court for the Southern District of New York recently added some weight to the majority rule on a hot-button issue for claims traders. In In re Firestar Diamond, Inc, the court ruled that a transferred claim can be disallowed under Section 502(d) of the Bankruptcy Code even if the entity holding the claim is not the recipient of a voidable transfer. According to the court, claim disallowance under Section 502(d) "rests on the claim and not the claim holder".