How is the Springfield litigation related to the Citigroup litigation?
At the time of Enron’s bankruptcy, Citigroup held billions of dollars in face value claims related to its financial dealings with Enron. In 2002, after Enron filed its bankruptcy petition, Citigroup transferred one such claim with a face value amount of $5 million to Deutsche Bank (previously known as Bankers Trust Company). Deutsche Bank then transferred that claim to Springfield Associates on May 15, 2002. The issue to be resolved in the Springfield matter is whether Enron should have to pay Springfield even though it was assigned a tainted claim from Citigroup post-petition. ECRC argues that the claim should be subject to equitable subordination or disallowance because to hold otherwise would allow Citigroup (or any other bad actor) to “wash” a claim by simply transferring it to a third party. Such claim washing, if successful, would legitimize such maneuvering, transforming a tainted claim into one having the validity and priority as claims held by innocent creditors. Such maneuver
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