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Corporate failures (at the risk of stating the obvious) usually result in the realization by creditors of the failed enterprise in less – often far less – than the par value of their claims. Unsurprisingly, this often leads to aggressive efforts to ascribe responsibility for the failure of the enterprise and to seek recovery from those deemed blameworthy (and deep-pocketed). Over the years, novel theories of liability have developed and been invoked against parties that were non-insiders of the corporate enterprise, such as lenders and professional advisors.

Earlier this year, U.S. Bankruptcy Judge Arthur Gonzalez ruled in the Enron bankruptcy proceeding that bankruptcy claims in the hands of innocent buyers may be equitably subordinated based on the conduct of upstream sellers, which need not be related to the transferred claim. See In re Enron Corp., 340 B.R. 180 (S.D.N.Y. March 31, 2006 (AJG)); In re Enron Corp., 333 B.R. 205, (S.D.N.Y. Nov. 17, 2005 (AJG)).

Buyers of claims in bankruptcy have long feared that their claims (including syndicated bank loan claims) may be tarnished by the conduct of a previous owner. Standard legal documentation used to purchase claims strives to protect buyers from "bad actors" in the upstream chain of title.

Fairness opinions, the opinion of a financial advisor that the price of a prospective transaction is fair from a financial point of view, have been in the news recently for several reasons. The controversy involves conflicts of interest between providers of fairness opinions and other parties involved in the transactions. There has also been discussion as to whether even “unbiased” fairness opinions provide meaningful information.