REMIC Trust Payments Adrift After Losing Clarity of Their Safe Harbor

Alston & Bird
Contact

As we previously reported, in April 2015 Judge Jacqueline P. Cox (U.S. bankruptcy judge for the Northern District of Illinois) issued an opinion that broadly interpreted the safe harbor provisions of Bankruptcy Code Section 546(e) in the context of payments on loans securitized using real estate mortgage investment conduit (REMIC) trusts.

In short, Judge Cox held that payments by the debtor to a bank that was the master servicer of a REMIC trust (which included a loan on which a debtor-affiliate was obligated) were protected by the Section 546(e) safe harbor because all elements of the statute were satisfied: (1) the payments were made to a financial institution; and (2) the payments were made in connection with a securities contract. The court held that full satisfaction of Section 546(e) warranted dismissing Count VI of the trustee’s complaint (the count for avoidance and turnover of the payments). Much of the April 2015 opinion’s analysis focused on whether the payments satisfied the second element: if the payments were made in connection with a securities contract.

Please see full Advisory for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Alston & Bird | Attorney Advertising

Written by:

Alston & Bird
Contact
more
less

Alston & Bird on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.