Under current law, affiliated creditors holding debt arising from the same loan transaction will not likely be lumped together when determining the number of creditors that have voted to approve or reject a plan, particularly where such affiliates held such debt prior to a bankruptcy filing and assert their claims through separate proofs of claim. Attempts to later manufacture separateness by transferring claims to affiliates for numerosity purposes will likely not, however, be respected. Recent proposals by the American Bankruptcy Institute seek to amend the Bankruptcy Code to collapse separate claims of affiliated entities under common investment management into one claim for voting purposes.
This Client Alert was republished by Law360 on July 24, 2015. Click here to read the Law360 article.