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avoidance claim, and such a requirement, if imposed, would invalidate avoidance claims in any case in which the estate could not make creditors whole. The availability to the defendants of the in pari delicto defense would also not affect the trustee's standing, because it is an affirmative defense and not a constitutional bar to the trustee's assertion of the claim.
Nisselson v. Lernout, 469 F.3d 143 (1st Cir. Nov. 8, 2006) (Where the merger of two companies was effectuated by the creation of a wholly owned subsidiary of Company A and the subsequent termination of Company B's existence, the bankruptcy trustee of the new subsidiary was barred by the in pari delicto doctrine from asserting any cause of action that Company B had against Company A for fraud in the process of the merger. Because the facts supported an imputation of the conduct of Company A to its subsidiary, the subsidiary was at least as responsible for the alleged wrong as the defendants. The innocence of Company B's directors, who became directors of the subsidiary after the merger, was irrelevant, because the in pari delicto doctrine looks to the relative culpability of the parties at the time of the alleged wrongdoing. No public policy grounds require a different result, because creditors could have factored the in pari delicto risk into their decisions to extend credit.)
Evans v. Ottimo, 469 F.3d 278 (2d Cir. Nov. 20, 2006) (Pre-petition state court default judgment that expressly found debtor had engaged in fraud bars relitigation in bankruptcy court of the fraudulent character of the debt. The default judgment resolved all issues necessary to establish nondischargeability under § 523(a)(2), so collateral estoppel applies based on the issue in the state court being identical to the issue in the bankruptcy court. The debtor had a full and fair opportunity to litigate the issue in state court even though the debtor did not answer the complaint or actually appear in the state court proceeding.)
Ajaka v. BrooksAmerica Mort. Corp., 453 F.3d 1339 (11th Cir. June 29, 2006) (District court erred in granting summary judgment to defendants on theory of judicial estoppel in Chapter 13 debtor's post-confirmation action for rescission and damages under the Truth in Lending Act. Debtor was not aware of the cause of action until post-confirmation, but when the debtor learned of the cause of action his attorney made demand on the creditor for rescission. The creditor then initiated an adversary proceeding in the bankruptcy case more than six weeks before the deadline to object to confirmation, and this adversary proceeding put
