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March 2018 Archives

Supreme Court Upholds Clear Error Review for Bankruptcy Court Determination of Insider Status

In U.S. Bank Nat'l Ass'n v. Village at Lakeridge, LLC the Supreme Court considered whether the Ninth Circuit's application of clear error review to a bankruptcy court's determination under its non-statutory insider test was erroneous. In the Ninth Circuit, an individual or entity is a non-statutory insider whose dealings with a bankruptcy debtor are subject to more scrutiny where (1) the closeness of its relationship with the debtor is comparable to the enumerated insider classifications in the Bankruptcy Code, and (2) the relevant transaction is negotiated at less than arm's length. In re Village at Lakeridge, LLC, 814 F.3d 993, 1001 (2016). Certiorari was granted only on the issue of whether the bankruptcy court's determination that a transaction was or was not at arm's length is a mixed question of law and fact for which de novo or clear error review was required.

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