Legal Opinion

Wallach v. Smith (In re NanoDynamics, Inc.)

United States Bankruptcy Court, W.D. New York

Decided December 12, 2014No. Bankruptcy No. 09-13438 K; Adversary No. 11-1002 KPublished

1Opinion of the Court

OPINION AND ORDER

MICHAEL J. KAPLAN, Bankruptcy Judge.

SUMMARY(1) If a corporation solicited a stock subscription without making pessimistic dis*407closures that the corporation itself had decided1 were required by securities regulations, and the subscriber has not fully paid, may the corporation’s eventual Chapter 7 Trustee successfully assert the fact that securities law provisions make it very hard for investors to walk away from their purchase obligations under a stock subscription agreement? The Court answers in the negative.2(2) The possibility that the corporation could have changed its…

2Cases cited6 opinions

Celotex Corp. v. Catrett, Administratrix of the Estate of CatrettSupreme Court of the United States · 1986
Fed. Sec. L. Rep. P 90,328 in Re International Business MacHines Corporate Securities Litigation Charles Kowal, Peter R. Herold, Albert Ominsky, Douglas Ominsky, Andrew Ominsky, Steven Horowitz, Dina Horowitz, Joan Howard, Mark Gardy, M.E. Lifshitz, Wai Chinn, Alexander Sands, Donald Lewis, Bruce Murphy, Barnett Stepak, and William Steiner v. International Business MacHines Corporation and Frank A. Metz, Jr.Court of Appeals for the Second Circuit · 1998
Royal Air Properties, Inc., a Corporation, Harold L. Heathman and Madge I. Heathman v. R. Philip SmithCourt of Appeals for the Ninth Circuit · 1962
Galbraith v. McDonaldSupreme Court of Minnesota · 1913
Black v. RIKER-MAXSON CORPORATIONDistrict Court, S.D. New York · 1975

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