Purchasing claims from bankruptcy estate .

Edwards Finance > Loans

Q. Could anyone direct me to some caselaw on the effect of purchasing claims in bankruptcy, particularly the following two aspects: A and B have a contract. A breaches contract, and breach forces B into bankruptcy. C purchases B's breach claim against A for $50K. Assuming A has some counterclaims against B, may A 1) assert them against C, 2) assert them against C only by way of set-off, or 3) only assert them against B. B is in bankruptcy. B has a 1983 claim against A. Can the trustee for B assign that action to C?

A. That counterclaims by way of setoff and recoupment (two distinct sorts) are core issues to be heard by the bankruptcy court is federal bankruptcy law. The merits of the setoff or recoupment will probably be determined by state law. In all states except Florida, the limit of recoupment is the value of the amount claimed in the bankruptcy, but the statute of limitations on the counterclaim will be waived by the filing of a claimin bankruptcy. The principal requirement is that the two claims arise from the same transaction. It is up to the trustee to decide what to do about the tort (or breach of contract, it could be either or both) claim. He/she could sell it (as may have happened in your hypo) or abandon it back to the debtor.=20 Whether the claims can be offset, and whether A can assert his claim against the assignee depends (again under state law) to the connexity of the two claims. Without more facts, and enough info to know what jurisdiction's law applies, no case citations could be useful. You might start your research with American Law Reports, Annotated, which has covered this field over the years (your nearest law library should have it, along with a comprehensive index.

Ask Edwards a Finance Question

Other Questions:

Removing a collection agency account from a credit report

I have two collection accounts on my credit report and they are wrecking my credit. Both are under $150 and both have been paid. However, I understand i went about paying them the incorrect way. I got no guarantee that they would remove the ...

You have to tie up a minimum deposit, pay an activation charge and high yearly fee to use your own money.Pay late and there is an interest charge for using your money. Even with bad credit you can open a bank account and get a Visa check ...

What's the best way to find a bankruptcy attorney?Speak with a bankruptcy attorney for more details.If an attorney isn't paid in full before the Chapter 7 case is filed, any unpaid fees are considered a general unsecured debt and are discharged...

Names we know all too well. These are just a few of the biggie companies that have slid into bankruptcy over the past 12 months. And I'll bet you your last dollar that between the time I write this article and the time you read it, we can ad...

I am in chapter 13 and want to sell my house. I was told by an attorney that I could list it for sale and market it without prior court permission, but do not court permission for the final sale once I have an offer to purchase. Can anyon...

Edwards Finance Menu

Ask a Question
About Us / Me
Contact Me
Privacy Policy

Sitemap

My Favorite Sites

PFBlog
Google Finance
Yahoo Finance
Motley Fool
Nveille's Financial Blog
AllFinanceMatters
Free Money Finance
2MillionBlog
The Terror Finance blog

Q&A Subjects