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  • Chris Kuhner

9th Circuit holds Court Must Investigate Motive Before Disallowing Votes for Bad Faith

The 9th Circuit Court of Appeals held in a published decision that, under 11U.S.C. §1126(e), a bankruptcy court may not designate claims for bad faith simply because (1) a creditor offers to purchase only a subset of available claims in order to block a plan of reorganization, and/or (2) blocking the plan will adversely impact the remaining creditors. The court held that, at a minimum, there must be some evidence that the creditor is seeking to secure some untoward advantage over other creditors for some ulterior motive.

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