Dana French v. Linn Energy, L.L.C., et al

Policy informs the result when the statutory language is ambiguous.

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Case Type:
Case Status:
18-40369 (5th Circuit, Sep 03,2019) Published
Claimant asserted claims for, among other things, "deemed dividends". The Court held that the deemed dividends gave the Claimant benefits normally reserved for equity investors, and, as a result, the claims were subordinated under Section 510(b) of the Bankruptcy Code. The court also held that the policies of Section 510 supported subordination and, even though the deemed dividend payments "do not fit perfectly in the investor box", the interest the Claimant enjoyed was more like that of an investor and not a creditor.
Procedural context:
Appeals from District Court and also a direct appeal from the Bankruptcy Court were consolidated.
In a fact pattern that began in 1930, the Claimant was the successor to a series of transactions in which the Claimant asserted a right to receive "deemed dividends" that were somewhat like settlement payments, the amounts of which were tied to corporate distributions.. [However, although readers are encouraged to follow the details of the transactions in the opinion itself}.
Clement, Haynes and Willett

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