Fulltext Search
Court holds that a bankruptcy termination provision that subordinates an in-the-money debtor’s right to a distribution may be an unenforceable ipso facto provision

In Lehman Brothers Special Financing, Inc. v. Ballyrock ABS CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.), Adv. P. No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011) [hereinafter “Ballyrock”], the United States Bankruptcy Court for the Southern District of New York held that a contractual provision that subordinates the priority of a termination payment owing under a credit default swap (CDS) to a debtor in bankruptcy, and which caps the amount of the termination payment, may be an unenforceable ipso facto clause under section 541(c)(1)(B).

USA, New York, Derivatives, Insolvency & Restructuring, Litigation, Alston & Bird LLP, Bankruptcy, Debtor, Injunction, Statutory interpretation, Safe harbor (law), Swap (finance), Liquidation, Default (finance), Credit default swap, Lehman Brothers, Title 11 of the US Code, United States bankruptcy court, US District Court for the Southern District of New York
Bankruptcy court holds that section 546(e) safe harbor does not apply to “settlement payments” made in a small, private leveraged buyout that poses no systemic risk to the securities market

In Geltzer v. Mooney (In re MacMenamin’s Grill, Ltd.), Adv. Pro. No. 09-8266 (Bankr. S.D.N.Y. April 21, 2011), the United States Bankruptcy Court for the Southern District of New York held that the safe harbor in section 546(e) of the Bankruptcy Code does not apply to a small, private leveraged buyout (LBO) transaction that posed no systemic risk to the stability of the financial markets.

USA, New York, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Alston & Bird LLP, Shareholder, Debtor, Fraud, Safe harbor (law), Interest, Leveraged buyout, Systemic risk, Title 11 of the US Code, United States bankruptcy court, US District Court for the Southern District of New York