From our private database of 32,100+ case briefs...
Cohen v. KB Mezzanine Fund II, LP (In re SubMicron Systems Corp.)
United States Court of Appeals for the Third Circuit
432 F.3d 448 (2006)
SubMicron Systems Corp. (SubMicron) (debtor) experienced financial difficulties. In 1997, SubMicron issued $20 million in notes to KB Mezzanine Fund II, LP; Equinox Investment Partners, LLC; and Celerity Silicon, LLC (collectively, the lenders) (defendants). The notes were secured by liens on SubMicron inventory, equipment, and other assets. SubMicron continued to struggle. In 1998 and 1999, SubMicron issued additional notes to the lenders. Also in 1999, as SubMicron continued to lose money, the lenders advanced additional funding to SubMicron. No notes were issued for this funding, though SubMicron recorded it as secured debt in a filing with the U.S. Securities and Exchange Commission (SEC). By June 1999, each of the lenders had representatives on the SubMicron board of directors. SubMicron filed for bankruptcy. Sunrise Capital Partners, LP (Sunrise) negotiated directly with the lenders—but not other SubMicron creditors—to purchase SubMicron’s assets. The plan administrator, Howard Cohen (plaintiff), challenged the Sunrise sale in federal district court, arguing in part that the 1999 funding should be characterized as equity rather than debt. The court approved the sale, finding that the absence of notes from the 1999 financing and the lenders’ representation on the SubMicron board did not necessarily support an equity characterization. Cohen appealed. The United States Court of Appeals for the Third Circuit granted certiorari.
Rule of Law
Holding and Reasoning (Ambro, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 583,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 583,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 32,100 briefs, keyed to 984 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.