Costello v. Fazio
United States Court of Appeals for the Ninth Circuit
256 F.2d 903 (9th Cir. 1958)
Relevant factsFree
Fazio and Ambrose (plaintiffs), partners who withdrew 88 percent of their capital contributions and took back promissory notes upon incorporating their struggling business, later filed creditor claims against the corporation's bankrupt estate; the bankruptcy referee found the company adequately capitalized and no fraud or self-dealing, refusing to subordinate their claims, and the district court affirmed on the trustee's petition for review.
IssueFree
Whether a corporate insider's claims against a bankrupt corporation may be subordinated to those of the company's other creditors.