Third Circuit Raises the Bar on Grants of Substantive Consolidation

The Journal Of Corporate Renewal

PUBLISHED ON: September 13, 2007

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It still may be too early to gauge the ultimate legacy that the 3d U.S. Circuit Court of Appeal’s reversal of a trial court’s grant of substantive consolidation in the Owens Corning bankruptcy case will have on reorganizations, securitizations, and business transactions in general. However, in propounding a new standard, the 3d Circuit raised the evidentiary bar necessary to establish a prima facie showing that substantive consolidation is warranted.