Law360, New York (August 19, 2011, 1:36 PM ET) -- In two recent decisions, the United States Bankruptcy Court for the Southern District of New York has interpreted narrowly certain of the Bankruptcy Code's safe harbor provisions.
In May, Judge James M. Peck ruled that a payment subordination provision in a swap agreement triggered by a bankruptcy constituted an unenforceable ipso facto clause and was not protected by the safe harbors. This resolved uncertainty related to a similar 2010 decision. See Lehman Bros. Special Fin. Inc. v. Ballyrock ABS CDO 2007-1 Ltd. (In re Lehman Bros....
A Debtor-Friendly View Of Safe Harbors
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