Second Circuit Court of Appeals Broadly Enforces Bankruptcy Safe Harbors to Protect Securities Settlement Payments

The Court of Appeals for the Second Circuit has held that the Bankruptcy Code’s safe harbors against avoidance of securities settlement payments protect early redemption payments of debt securities. In so doing, the Court broadly ruled that the settlement payment protections are available for non-ordinary securities transactions that are not purchases. Enron Creditors Recovery Corp. v. Alfa, 09-5122-bk(L) (June 28, 2011) (2-1 decision).