Section 548 of the Bankruptcy Code provides that a transfer made within two years of a bankruptcy filing is fraudulent if the debtor received less than “reasonably equivalent value” in exchange for the transfer and (i) the transfer rendered the debtor insolvent or was made at a time that the debtor was already insolvent or; (ii) the debtor had an unreasonably small amount of capital; or (iii) the debtor intended to incur, or believed that it would incur, debts that it would be unable to pay as they matured.  The fraudulent transfer laws of most states, made applicable in bankruptcy pro

The Bottom Line:

In Michigan State Housing Development Authority v. Lehman Brothers Derivatives Products, Inc., et al. (In re Lehman Brothers Holdings Inc., et al.) (Michigan State Housing), 1 the US Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) recently held that a provision in a swap agreement that shifted the methodology for calculating termination amounts upon the debtor counterparty’s bankruptcy was enforceable under the Bankruptcy Code’s safe harbor for liquidating, terminating and accelerating swap agreements.

Supreme Court Rules on Importing And Selling Foreign Made Goods

Neither snow nor rain nor heat nor gloom of night – and certainly not a batch of freezing rain and ice that’s currently paralyzing the greater Baltimore-Washington area right now – stays your trusty editors from the swift completion of their appointed rounds; namely, bringing you the weekly roundup of 

Section 546(e) of the Bankruptcy Code provides a “safe harbor” for certain transfers involving the purchase and sale of securities and protects those transfers from avoidance in bankruptcy proceedings as preferences or constructively fraudulent conveyances.  Specifically, section 546(e) insulates transfers that are “settlement payments” used in the securities trade, as well as other transfers made to or from certain parties, including financial institutions, financial participants and stockbrokers, in connection with a securities contract.  Section 741(8) of the Bankruptcy Code de

In a recent decision, the Court of Appeals for the Ninth Circuit shocked observers by holding that bankruptcy courts have the power to recharacterize claims on account of unpaid debts as equity infusions that cannot be repaid until all creditor claims have been satisfied.  In In re Fitness Holdings Int’l, Inc., 714 F.3d 1141 (9th Cir.

In In re Nilsson, 129 Nev. Adv. 101 (December 26, 2013), the United States Bankruptcy Court for the District of Nevada certified the following question to the Nevada Supreme Court:

In recent years, bankruptcy courts have come closer to reaching a consensus regarding their ability to recharacterize debt into equity. Yet, beneath this consensus lies a deepening divide that lenders should be aware of. Recharacterization challenges “the assertion of a debt against the bankruptcy estate on the ground that the ‘loaned’ capital was actually an equity investment.” In re Insilco Techs., Inc., 480 F.3d 212, 217 (3d Cir. 2007) (internal citations omitted).