"Buyers Beware: Delaware Bankruptcy Court Finds that Avoidance Risk Travels with Debt Purchases" by Paul Haskel

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May 16, 2012

In the KB Toys, Inc. bankruptcy case, the Delaware Bankruptcy Court found that claim disabilities – such as preference and avoidance risk – attach to and travel with claims purchased in the secondary markets. The decision highlights the importance of performing careful diligence and obtaining market standard “distressed” representations and warranties and/or indemnifications from sellers. In this memorandum, Richards Kibbe & Orbe LLP partner Paul B. Haskel discusses the KB Toys decision and ways in which purchasers can protect their investments in light of its holding.

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