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Can Selfish Be Substantial?

The Role of Motivation in Substantial Contribution Claim Standards

February 12, 2013

In an August 2012 decision in the Tropicana case, the U.S. Court of Appeals for the Third Circuit upheld the U.S. Bankruptcy Court for the District of Delaware’s denial of a creditor group’s $2.3 million “substantial contribution” claim for expenses incurred while attempting to impose governance changes after alleged mismanagement led to the company’s bankruptcy. The decision is nonprecedential, but in upholding a bankruptcy court ruling based largely on the motives underlying the creditor actions at issue, it nonetheless offers a further gloss on the demanding standard applied to substantial contribution claims in the Third Circuit and underscores why a creditor’s selfish motives are almost always fatal to its substantial contribution claim under that standard.

Damian Schaible and Eli Vonnegut of the Davis Polk Insolvency and Restructuring Group recently published an article, "Can Selfish Be Substantial? Motivation in Substantial Contribution Claim Standards" discussing the Tropicana decision and substantial contribution claim standards generally.

Read the article >

If you have questions regarding this publication, please call any of the lawyers listed below or your regular Davis Polk contact.

Donald S. Bernstein 212 450 4092 donald.bernstein@davispolk.com
Timothy Graulich 212 450 4639 timothy.graulich@davispolk.com
Marshall S. Huebner 212 450 4099 marshall.huebner@davispolk.com
Brian M. Resnick 212 450 4213 brian.resnick@davispolk.com
Damian S. Schaible 212 450 4580 damian.schaible@davispolk.com
Eli James Vonnegut 212 450 4331 eli.vonnegut@davispolk.com

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