News & Analysis as of

Chapter 11 Avoidance Fraudulent Transfers

Jones Day

Imputation of Agent's Knowledge to Transferee in Bankruptcy Avoidance Litigation Defeats Good-Faith Defense

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In situations where a bankruptcy court avoids a fraudulent transfer or similar transaction, subsequent transferees who received proceeds of the avoided transaction from the initial transferee can avoid liability in certain...more

DLA Piper

Second Circuit Rules Bankruptcy Code’s “Safe Harbor” Provision Preempts State Law Fraudulent Transfer Claims

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On September 19, 2024, the US Court of Appeals for the Second Circuit issued a summary order in which it held that the “safe harbor” provision of Section 546(e) of the Bankruptcy Code preempted a bankruptcy trustee’s state...more

Jones Day

Claims Traders Alert: Another Bankruptcy Court Rules that a Traded Claim Can Be Disallowed if the Seller Received a Voidable...

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The U.S. Bankruptcy Court for the Southern District of New York recently added some weight to the majority rule on a hot-button issue for claims traders. In In re Firestar Diamond, Inc., 615 B.R. 161 (Bankr. S.D.N.Y. 2020),...more

Jones Day

Tribune District Court Rules That LBO Payments May Not Be Avoided Because Debtor Was "Customer" of "Financial Institution"

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In In re Tribune Co. Fraudulent Conveyance Litig., 2019 WL 1771786 (S.D.N.Y. Apr. 23, 2019), the U.S. District Court for the Southern District of New York denied a litigation trustee’s motion to amend a complaint seeking to...more

Mintz - Bankruptcy & Restructuring Viewpoints

The Delaware Bankruptcy Court Grapples With Section 546(e) Post-Merit Management

In its ruling in FTI Consulting, Inc. v. Sweeney (In re Centaur, LLC), the United States Bankruptcy Court for the District of Delaware addressed the Supreme Court’s recent clarification of the scope of Bankruptcy Code Section...more

Shumaker, Loop & Kendrick, LLP

Client Alert: The Long Arm of the Law: Avoidance Actions Without Borders

A June 2018 Bankruptcy Court decision in the Southern District of New York (SDNY) held that foreign companies with no presence in the U.S. were subject to default judgments....more

Jones Day

From the Top in Brief

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On April 3, 2018, the U.S. Supreme Court issued an order that, in light of its recent ruling in Merit Management Group LP v. FTI Consulting Inc., 138 S. Ct. 883, No. 16-784 (Feb. 27, 2018), the Court would defer consideration...more

Jones Day

Foreign Debtors’ Forum Shopping Warranted Stay of U.S. Avoidance Litigation

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Even if a U.S. court has jurisdiction over a lawsuit involving foreign litigants, the court may conclude that a foreign court is better suited to adjudicate the dispute because either: (i) it would be more convenient, fair,...more

Dechert LLP

Restructuring and Insolvency Bulletin: Issue 4 - May 2018: If You Don’t Succeed in Anguilla, Should You Try Again in the US?

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Two United States Bankruptcy Judges for the Southern District of New York recently issued a joint opinion addressing common issues raised by motions to dismiss in two separate adversary proceedings – one pending before Judge...more

Mintz - Bankruptcy & Restructuring Viewpoints

Supreme Court Bankruptcy Thoughts: Scope of Safe Harbor and Appellate Review

The Supreme Court recently addressed two bankruptcy issues. In its Merit Management opinion, the Court resolved a circuit split regarding the breadth of the safe harbor provision which protects certain transfers by financial...more

Skadden, Arps, Slate, Meagher & Flom LLP

Bankruptcy Code’s Safe Harbor Defense Eliminated by Supreme Court; Variant Defense May Survive

In a unanimous decision in Merit Mgmt. Grp., LP v. FTI Consulting, Inc., the U.S. Supreme Court addressed the scope of a Bankruptcy Code exception to the “avoiding powers” of a bankruptcy trustee or Chapter 11...more

Kelley Drye & Warren LLP

Supreme Court Displays More Pragmatic Approach to the Bankruptcy Code in Merit Management v. FTI Consulting

The Supreme Court’s recent decision in Merit Management Group, LP v. FTI Consulting, Inc. has appropriately drawn significant attention. The Court, by narrowing the “safe harbor” provision of Section 546(e) of the Bankruptcy...more

Cole Schotz

The Supreme Court Clarifies The Scope Of Section 546(E)’S Safe Harbor For Securities Related Transactions In Merit Management...

Cole Schotz on

The Bankruptcy Code gives a bankruptcy trustee, or the debtor in possession, the power to “avoid” certain transfers made by the debtor at various times before filing for bankruptcy relief. Congress provided a number of...more

Jones Day

Debate Intensifies as to Whether the Bankruptcy Code’s Avoidance Provisions Apply Extraterritorially

Jones Day on

The ability of a trustee or chapter 11 debtor-in-possession to avoid fraudulent or preferential transfers is a fundamental part of U.S. bankruptcy law. However, when a transfer by a U.S. entity takes place outside the U.S. to...more

Jones Day

U.S. Supreme Court Narrows Scope of Section 546(e)’s Safe Harbor for Securities Transaction Payments

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On February 27, 2018, the U.S. Supreme Court issued a highly anticipated ruling resolving a long-standing circuit split over the scope of the Bankruptcy Code’s "safe harbor" provision exempting certain securities transaction...more

Latham & Watkins LLP

Supreme Court’s Merit Management Ruling Highlights Potential Alternative Path to Safe Harbor

Latham & Watkins LLP on

Possible application of Section 101(22)(A) to safe harbor’s covered entity requirement raises important questions for future transferee defendants. Key Points: ..Merit Management raises the possibility that customers of...more

Hogan Lovells

Supreme Court Narrows Scope of Safe Harbor Exception for Securities Clawbacks

Hogan Lovells on

On February 27, 2018, the U.S. Supreme Court resolved a circuit split under the Bankruptcy Code and determined that where funds passed through financial institutions acting as payment conduits, where the ultimate transfer...more

Troutman Pepper Locke

Supreme Court Narrows Applicability of Bankruptcy Code's Safe Harbor for Securities-Related Transfers

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In a case that could have significant, long-term ramifications for the holders of stock and other securities, the U.S. Supreme Court vastly limited the scope of a Bankruptcy Code “safe harbor” that shields certain transfers...more

Neal, Gerber & Eisenberg LLP

Supreme Court Limits Safe Harbor Defense in Bankruptcy "Clawback" Suits

Recently, the United States Supreme Court decided Merit Management Group, LP v. FTI Consulting, Inc., a decision that has potentially far-reaching implications for a broad range of business transactions, particularly...more

Alston & Bird

U.S. Supreme Court Narrows the Scope of the Section 546(e) Safe Harbor

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Resolving a circuit split, the U.S. Supreme Court’s ruling excludes protection for certain transferees when a settlement payment merely passes through an intermediary. Our Bankruptcy & Financial Restructuring and Finance...more

Jones Day

High Court Tightens Section 546(e) Safe Harbor for Securities Transaction Payments

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The U.S. Supreme Court issued a highly anticipated ruling resolving a long-standing circuit split over the scope of the Bankruptcy Code's "safe harbor" provision exempting certain securities transaction payments from...more

A&O Shearman

Not So Safe: The Supreme Court Clarifies the Scope of the Bankruptcy Code’s Section 546(e) Safe Harbor Provision

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Section 546(e) of the Bankruptcy Code shields certain transfers involving settlement payments and other payments in connection with securities contracts (for example, payment for stock) made to certain financial...more

Holland & Knight LLP

Supreme Court Clarifies Securities Safe Harbor Under Bankruptcy Code

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• In a unanimous decision, the U.S. Supreme Court ruled against the petitioner in Merit Management Group, LP, Petitioner v. FTI Consulting, Inc., affirming the decision of the U.S. Court of Appeals for the Seventh Circuit. ...more

Burr & Forman

“Clearing & Settlement” Exception to Trustee’s Avoiding Powers Saves Only Payments “To” (not “Through”) Market Intermediaries

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Last week, the unanimous Supreme Court clarified that the “clearing and settlement” exception to a bankruptcy trustee’s avoiding powers covers only payments “to,” not merely through, financial market participants....more

Morrison & Foerster LLP

The Supreme Court Reshapes the Section 546(e) Safe Harbor

The Supreme Court’s recent decision in Merit Management Group, LP v. FTI Consulting, Inc. has the potential to dramatically change how the safe harbor contained in § 546(e) will be applied to avoidance actions brought under...more

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