American Broadcasting Systems, Inc. v. Nugent (In re Betacom of Phoenix, Inc.)

Appellants Patrick and Anita Nugent (“the Nugents”), claimants in the bankruptcy proceedings of Betacom of Phoenix, Inc., Beta Communications, Inc. (collectively, the “Betacom Entities”), and American Broadcasting Systems, Inc. (“ABS”), seek parity with the general unsecured creditors of the Betacom Entities and ABS. The bankruptcy court granted partial summary judgment to the Beta com Entities and ABS (collectively, the “Debtors”) and subordinated the Nugents’ breach of contract claim under 11 U.S.C. § 510 (b). The district court reversed the decision of the bankruptcy court to subordinate the claim. The district court held that an actual purchase or sale of securities is necessary to trigger mandatory subordination under § 510(b) and that there was an issue of material fact as to whether there had been an actual purchase or sale of securities.

The Debtors appeal the decision of the district court. 28 U.S.C. § 158 (d) gives this Court jurisdiction over final orders of the district court rendered in its bankruptcy appellate capacity. See In re Adams Apple, Inc., 829 F.2d 1484, 1487 (9th Cir.1987) (holding that a district court order subordinating the claims of some creditors is…