Claims Trading Benefits and Risks


Summary

This practice note covers the benefits and risks to trading claims filed in a bankruptcy case. "Perhaps nothing has changed the face of bankruptcy in the last decade as much as the newfound liquidity in claims." Glenn E. Siegel, Introduction: ABI Guide to Trading Claims in Bankruptcy ABI Committee on Public Companies and Trading Claims, 11 Am. Bankr. Inst. L. Rev. 177 (2003). The claims trading industry has only grown in the years since the publication of this quote. Indeed, it is common in mega Chapter 11 cases to see on the docket hundreds, if not thousands, of claims transfer notices filed pursuant to Federal Rule of Bankruptcy Procedure 3001(e), and that is only a small set of the claims trading activity. For example, in the first seven months of 2013, over 6,000 claims transfer notices were filed. The vast majority were filed in the Southern District of New York and the District of Delaware. As a point in case, 782 notices were filed in July 2013 alone.