Ninth Circuit Rules That Debtor’s Insider Can Sell Claims to Friendly Third Parties and Garner Critical Acceptance Votes on Its Plan

By Los Angeles Bankruptcy Attorney on February 9, 2016

U.S. Bank N.A. v. The Village at Lakeridge, LLC (In re The Village at Lakeridge, LLC), ___F3d___, 2016 WL 494592 (9th Cir. Feb. 8, 2016). Earlier this month, the Ninth Circuit ruled that an insider can sell its claim to a friendly third party, whose vote fulfills Bankruptcy Code section 1129(a)(10)’s requirement of an impaired consenting class, unless the third party has a close relationship with the debtor and negotiated the claim purchase at less than arm’s length.