Bankruptcy Code v. Civil Code

November 8, 2013

CHS Inc. v. Plaquemines Holdings LLC presented the interaction of the Bankruptcy Code and an old section of the Louisiana Civil Code (involving cases from 1849, 1828, and 1913).  No. 13-30028 revised (Nov. 26, 2013).  The Louisiana Code provision provides: “When a litigious right is assigned, the debtor may extinguish his obligation by paying to the assignee the price the assignee paid for the assignment, with interest from the time of the assignment.”  As the Fifth Circuit noted: “The law is aimed at preventing unnecessary litigation by reducing the ability of third parties to buy and sell legal claims for profit.”   CHS, part owner of a tract of land along with a bankrupt company, attempted to redeem that company’s interest after it was sold as part of a dissolution case required by the bankruptcy.  The Court found that the sale, conducted pursuant to bankruptcy court orders, fell within a “judicial sale” exception to the Code provision that prevented CHS from using it here.  

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