Sasson v. Bridger Consulting Group, Inc.

Summary

The Appellate Division, First Department reversed the denial of plaintiff's motion for summary judgment in lieu of complaint and granted the motion. The court held that a subordination clause in a convertible promissory note did not prevent the plaintiff from commencing a proceeding and obtaining a judgment against the defendant upon default; the clause instead governed payment priority relative to other creditors.

Holdings

1. The subordination clause did not restrict plaintiff's right to commence a proceeding against defendant upon default under the note in order to reduce plaintiff's claim to a judgment.
2. Language purporting to forbid or limit payments on subordinated debt while senior debt remained unpaid structured creditor priority and did not affect plaintiff's right to a judgment against defendant as debtor.

Questions Presented

1. Whether a subordination clause in a convertible promissory note restricted plaintiff's right to commence a proceeding and obtain a judgment against the debtor upon default.
2. Whether language limiting payments on subordinated debt while senior debt remained unpaid affected plaintiff's right to obtain a judgment against defendant.

Disposition

reversed