Grossman, et al. v. Lothian Oil Inc., No. 10-50683 (5th Cir. 2011)
Annotate this CaseThis bankruptcy appeal involved parties that have a business history extending from at least April 27, 2005 where appellee and the Secretary of Lothian Oil signed two agreements which would lead to proofs of claim 164 and 171. At issue was whether the bankruptcy court could recharacterize a claim as equity rather than debt. The court held that because Texas law would not have recognized appellee's claims as asserting a debt interest, the bankruptcy court correctly disallowed them as debt and recharacterized the claims as equity interests. Moreover, because insiders and non-insiders alike could mischaracterize their claims in contravention of state law, the court declined to limit recharacterization to insider claims. The court further held that the other assertions of error were without merit.
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