Contributed by Prashant Rai
In FTI Consulting, Inc. v. Merit Management Group, LP, No. 15-3388, 2016 WL 4036408 (7th Cir. July 28, 2016), the Seventh Circuit discussed the scope of section 546(e) of the Bankruptcy Code. Section 546(e) protects securities transactions involving financial institutions from certain kinds of avoidance actions. The Court addressed whether the provision applies only to transactions in which a financial institution holds a beneficial interest, or whether it also safe harbors transactions that merely use financial intermediaries. The Court adopted the narrower view, potentially exposing a litany of securities transactions, including leveraged buy-outs, to avoidance risk. Prashant Rai recently published an article in Bloomberg BNA’s Bankruptcy Law Reporter that discussed the implications of the decision. To access the article, click the link below:
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