Tag Archives: bankruptcy

Safe Harbors and Securitizations: Loan Payments in Connection with a Commercial Mortgage-Backed Securitization Protected from Clawback under the U.S. Bankruptcy Code Safe Harbors

By Andrea Pincus, Paul Turner, and Sarah Kam You can find a detailed analysis in our client alert on the order Safe Harbors and Securitizations: Loan Payments in Connection with a Commercial Mortgage-Backed Securitization Protected from Clawback under the U.S. Bankruptcy Code Safe Harbors The Swap Report The U.S. Bankruptcy Court, Northern District of Illinois issued … Continue Reading

District Court Affirms that Zero Purchase Price Repo Transactions May Be Considered “Repurchase Agreements” Under the Bankruptcy Code

By Todd Zerega and Luke Sizemore INTRODUCTION On February 18, 2013, we reported that the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) found that individual repurchase transactions having a purchase price of zero may fall within the definition of “repurchase agreement” under the Bankruptcy Code provided that the master agreement … Continue Reading

Seventh Circuit Court of Appeals Reverses District Court, Follows Trend of Applying Bankruptcy Code Safe Harbors Literally and Expansively

By Todd Zerega and Luke Sizemore INTRODUCTION On January 24, 2013, we reported that the United States District Court for the Northern District of Illinois (the “District Court”) declined to apply a literal interpretation of the Bankruptcy Code safe harbor provision protecting “settlement payments” and transfers “in connection with a securities contract” from avoidance and, … Continue Reading

MtGox Seeks Protection Under Chapter 15 of the Bankruptcy Code

By Todd Zerega and Luke Sizemore In late February 2014, MtGox Co., Ltd (“MtGox”), once the largest bitcoin exchange in the world, suspended all trading on its exchange after internal investigations revealed a loss of approximately 750,000 of its customers’ bitcoins worth nearly $473 million. That loss caused MtGox to become insolvent. On February 28, … Continue Reading

Bankruptcy Code “Safe Harbor” Provisions Do Not Protect Contractual Right to Triangular Setoff

By Todd Zerega and Luke Sizemore CASE SNAPSHOT Prior to filing for bankruptcy, a debtor entered into a repurchase agreement with an investment bank and a swap agreement with an affiliate of the investment bank. Following commencement of the debtor’s bankruptcy case, the investment bank and its affiliate effectuated a triangular setoff whereby the banks … Continue Reading

Second Circuit Interprets Securities Contract Safe Harbor Broadly For Second Time in Three Years

By Todd Zerega and Luke Sizemore CASE SNAPSHOT For the second time in three years, the United States Court of Appeals for the Second Circuit (the “Court”) has taken a broad view of the “safe harbor” provision found in section 546(e) of the Bankruptcy Code for certain “settlement payments” and transfers in connection with securities … Continue Reading

Fourth Circuit Concludes that Certain Commissions and Margin Interest Payments are Protected from Avoidance by “Stockbroker Defense”

By Todd Zerega and Luke Sizemore CASE SNAPSHOT In a case of first impression, the Fourth Circuit determined that broker commissions shown to be reasonable and customary parts of settling stock sales constitute "settlement payments" and that the payment of margin interest constitutes "margin payments" under section 546(e) of the Bankruptcy Code such that these … Continue Reading

In re Lehman Brothers Inc.: Repo Claims Fall Outside of SIPA Protection

  By Todd Zerega and Tom Watterson As part of the Lehman Brothers Inc. ("Lehman") bankruptcy, the Bankruptcy Court for Southern District of New York ("Court") determined that three banks’ (the "Claimants") claims in relation to repurchase agreements ("repos") were not "customer claims" entitled to customer protection under the Securities Investor Protection Act of 1970 ("SIPA"). … Continue Reading

Bankruptcy Court Concludes that Renewable Power Purchase and Sale Agreement is a “Forward Contract” Entitled to Safe Harbor Protections

By Todd Zerega and Luke Sizemore CASE SNAPSHOT Relying upon a four-part test developed by the Court of Appeals for the Fourth Circuit, the Bankruptcy Court determined that a renewable power purchase and sale agreement is a "forward contract" that is not subject to the automatic stay pursuant to the safe harbor provision of section … Continue Reading

Reminder: Public Meeting November 19th – Fifth Series of CFTC Proposed Rules

 WHAT: CFTC to hold Public Meeting on Fifth Series of Proposed Rules. Topics to be discussed: 1) Swap data repositories 2) Real-time public reporting of swap transaction data 3) Protection of collateral of counterparties to uncleared swaps, and treatment of securities in a portfolio margining account in a commodity broker bankruptcy 4) Data recordkeeping 5) Issuance of … Continue Reading

CFTC Roundtable: Individual Customer Collateral Protection

WHAT: CFTC Roundtable on Individual Customer Collateral Protection. Topics  to be discussed: 1) Concerns of customers that trade derivatives with respect to safety of their collateral 2) Models to address those concerns and how to implement such models 3) Structural changes to existing clearing architecture to implement those models 4) Cost of such changes BENEFIT OF … Continue Reading
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