Safe Harbor Protection Generally

In general, a trustee or debtor-in-possession in a bankruptcy has the power to avoid certain prepetition transfers made by a Debtor. The most common of these are fraudulent transfers and preference payments. But this avoiding power is not unlimited. It is subject to a number of codified exceptions and defenses. And one such exception that has been used to shield an increasing number of transactions is the securities “safe harbor” provision found in section 546(e) of the Bankruptcy Code.

The Eight Circuit Court of Appeals recently weighed in on the extent to which a debtor must search for “known” creditors in order to provide sufficient notice of its bankruptcy and satisfy due process. In Dahlin v. Lyondell Chemical Co., ___ F.3d ___ (8th Cir. Jan. 26, 2018), the Eighth Circuit determined that a “known” creditor is one that is reasonably ascertainable, and a debtor need not perform more than one reasonably diligent search to unveil the identity of “known” creditors.

Can a bankruptcy court order the “structured dismissal” of a Chapter 11 case if such dismissal would alter the ordinary priority rules for creditor distributions under the Bankruptcy Code? In Czyzewski v. Jevic Holding Corp., 580 U.S. (March 22, 2017) (Jevic), the Supreme Court recently determined that such an order cannot issue without consent from all affected creditors even in “rare cases in which courts could find sufficient reasons to disregard priority.”

In Executive Benefits Insurance Agency v. Arkison, Chapter 7 Trustee of Estate of Bellingham Insurance Agency, Inc., — U.S. — (June 9, 2014) (Bellingham), the Supreme Court shed light on how bankruptcy judges must proceed when confronted with claims that they cannot finally adjudicate as non-Article III judges.  

The Eighth Circuit Court of Appeals recently held in Lewis Brothers Bakeries Incorporated and Chicago Baking Company v. Interstate Brands Corporation (In re Interstate Bakeries Corporation), 690 F.3d 1069 (8th Cir. Aug.

Despite the Supreme Court’s recent decisions in Executive Benefits Insurance Agency v. Arkinson, 573 U.S. ___ (2014) (Arkinson) and Stern v. Marshall, 564 U. S. ___ (2011) (Stern),which dealt with the division of authority between bankruptcy courts and Article III courts, the question of whether a party could consent to a bankruptcy court’s final adjudication of so-called “Stern claims” remained an open issue. No longer. Recently, in Wellness International Network, Ltd. v. Sharif, ___ U.S.