The Loan Syndications and Trading Association filed an amicus brief in the District Court of New York Oct. 10 relating to a recent ruling in the Enron court case that could render some Enron bankruptcy claims worthless. The filing addresses the merits of a ruling made by Judge Arthur Gonzalez, who is presiding over the Enron case in the United States Bankruptcy Court for the Southern District of New York, which would disallow bankruptcy claims held by investors who bought loans led by banks that Enron claims defrauded its creditors.
The LSTA considered filing an amicus brief in April to address the ruling made by Judge Gonzalez on March 31 (CIN, 4/28). The ruling would disallow certain bankruptcy claims because they were bought from banks that Enron alleges committed fraud on transactions that are unrelated to the loans (4/28).
This is the second amicus brief the LSTA has filed in connection with the Enron case. It filed an amicus brief earlier this year in support of defendants that dispute another ruling by Judge Gonzalez, which makes certain bankruptcy claims subject to equitable subordination. Judge Gonzalez ruled last November that bankruptcy claims sold by certain banks alleged to have committed fraud should be subject to equitable subordination. Ganz said the two Enron disputes, which will be heard together, could eventually end up in front of the U.S. Supreme Court.