Bankruptcy Court Recharacterizes Alleged Loan as Equity Under Delaware Law
By EsqSocial Corporation 21/04/21
When is a loan not a loan? The SDNY Bankruptcy Court in In Re: Live Primary, LLC held that a $6 million start-up loan was actually an equity contribution after analyzing the terms of the transaction and the intent of the parties. The court recharacterized the loan as equity given the alleged loan functioned as an equity investment would be expected to function. As a result, the insider investor’s claim was subordinated to the claims of creditors of the company....
By: Troutman Pepper