There are times when an unusual factual setting provides for a difficult legal analysis and even a surprising result. An example of such a case occurred recently in Bank of New York Mellon Trust. v. Miller (In re Franklin Bank), Case No. 13-1713-RGA, in which the U.S. District Court for the District of Delaware reversed the decision of the U.S. Bankruptcy Court for the District of Delaware and held that a creditor’s failure to file a proof of claim for years following the bar date did not constitute a waiver of the creditor’s contractual subordination rights or warrant equitable subordination of the creditor’s claim.
The district court’s decision provides one court’s views of the level of conduct that is required to affirmatively waive one’s contractual subordination rights or satisfy the standard to have a noninsider’s claim equitably subordinated.
