Quality Stores LBO Payouts Exempt From Suits: Court

Law360, New York (July 8, 2009, 12:00 AM EDT) -- A federal appeals court has ruled that payouts made to former shareholders of Quality Stores Inc. as a result of a leveraged buyout transaction that helped tip the company into bankruptcy cannot be recovered by the estate because the transfers were made through an intermediary bank, and not directly by the retailer.

Weighing in on an issue of first impression within its circuit, the U.S. Court of Appeals for the Sixth Circuit affirmed prior rulings that Bankruptcy Code Section 546(e), which protects certain payments made through...
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