Second Circuit Rules that Payments Made to Purchase Notes are Exempt from Avoidance Under Section 546(e) of the Bankruptcy Code

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On June 10, the Second Circuit Court of Appeals held in the Quebecor World (USA) Inc. bankruptcy that payments made by a company in purchasing notes issued by an affiliate constituted transfers made in connection with a securities contract. Therefore, the payments were protected from avoidance by a “safe harbor” under section 546(e) of the Bankruptcy Code. Orrick covered the Quebecor decision in depth in the linked client memo. Quebecor Case.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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