In the case of Finance and Guaranty Company v. Oppenheimer, Trustee (1927), the U.S Supreme Court was tasked with determining whether a bankruptcy court had jurisdiction to enjoin a creditor from pursuing an action in state court against a bankrupt debtor's guarantor. The Finance and Guaranty Company argued that it should be allowed to proceed with its claim in state court, while Oppenheimer contended that all claims related to the bankruptcy needed to be resolved within the federal system. The Supreme Court ruled in favor of Oppenheimer, holding that when there is substantial identity between parties involved in both suits and where property rights are at stake or enforcement of liens upon such property may result from successful prosecution of either suit, then courts exercising bankruptcy jurisdiction have power under Section 2(15) of Bankruptcy Act not only to stay proceedings pending elsewhere but also affirmatively enjoin institution or further prosecution thereof.

In the dissenting opinion for Finance and Guaranty Company v. Oppenheimer, it was argued that the majority's decision to uphold a lower court ruling in favor of the trustee contradicted established principles of equity jurisprudence. The dissenting justices contended that while a creditor has an equitable lien on funds wrongfully diverted from their intended use, this principle should not apply when there is no proof of fraud or collusion between debtor and third party. They believed that if a debtor uses borrowed money for purposes other than those specified by the lender, it does not automatically give rise to an equitable lien unless there is evidence showing fraudulent intent or conspiracy with third parties who received such funds. In this case, they maintained that since there was no proven fraud or collusion involved in diverting loan proceeds into real estate investments instead of using them as working capital as agreed upon with lenders, upholding an equitable lien against these properties would be unjustified and contrary to established legal precedents.