Section 546(e) of the Bankruptcy Code limits the ability of a trustee or debtor-in-possession to avoid as a constructive fraudulent transfer or preferential transfer a transaction in which the challenged settlement payment was made through a stockbroker or a financial institution.1 Because of the broad protection granted by section 546(e) – the so-called “safe harbor” provision – parties structuring a leveraged buyout (“LBO”) or similar transaction often ensure that settlement funds flow through one of the listed institutions to inoculate the beneficiaries from a later challenge as a constr
The Bankruptcy Court for the Southern District of New York recently held in Edward S. Weisfelner, as Litigation Trustee of the LB Creditor Trust v. Fund 1., et al.
In December, the Sixth Circuit, in Grant, Konvalinka & Harrison, P.C. v. Still (In re McKenzie), 737 F.3d 1034 (6th Cir. 2013), addressed two matters of first impression when it adopted the majority rules that (i) a creditor who seeks relief from the bankruptcy automatic stay has the burden to prove the validity of its perfected security interest in collateral; and (ii) the expiration of the two-year statute of limitations on bankruptcy avoidance actions does not prevent the trustee from asserting them defensively under section 502(d) of the Bankruptcy Code.
When a chapter 7 bankruptcy case is filed, a trustee is appointed to gather and sell the debtor’s assets. To aid in this effort, the trustee is empowered to avoid certain transfers pursuant to Bankruptcy Code sections 544 - 550. The trustee also is empowered, pursuant to Bankruptcy Code § 542, to seek turnover of assets belonging to the estate. The Ninth Circuit Court of Appeals recently held that a party may be required to turnover estate property even if the party is no longer in possession of such property. See Shapiro v.
In Simon v. FIA Card Services, N.A.,[1] the U.S.
In In re B.R. Brookfield Commons No. 1 LLC, 735 F.3d 596 (7th Cir. 2013) (No.
On January 14, 2014, Judge Robert E.
On January 14, 2014, Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York in Weisfelner v. Fund 1. (In re Lyondell Chemical Co.), Adv. Proc. No. 10-4609 (REG), 2014 WL 118036 (Bankr. S.D.N.Y. Jan.
The “new value” defense used by creditors in preference actions requires a creditor to determine the pre-petition amounts of unpaid “new value” it gave to a debtor after the debtor paid the creditor for goods/services provided. Debtors often argue that creditors can’t use this defense for pre-petition new value that has been repaid on a post-petition basis. Such repayments include critical vendor payments and payments for goods/services provided to the debtor within the 20 days prior to a bankruptcy filing.