In a decision released on October 17, KTAP partners Paul H. Aloe and David N. Saponara successfully secured the withdrawal of an adversary proceeding from the S.D.N.Y. Bankruptcy Court to the District Court in a dispute where a chapter 11 liquidating trust sought to recover over $6 million from the firm’s client by suing to enforce a promissory note and avoid a pre-bankruptcy settlement and release as fraudulent transfers. The District Court also compelled the plaintiff to arbitrate its note enforcement claim against the firm’s client in a rabbinical court (beth din) and stayed the fraudulent transfer claims pending the outcome of the arbitration.
The plaintiff in this case was a liquidating trust, which itself had not entered into the arbitration agreement. The Court held that it was bound by the prior agreement.
This decision builds on the firm’s prior win in February 2025, defeating the plaintiff’s motion for summary judgment in the Bankruptcy Court.
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