Understanding The Metavante Decision

Law360, New York (October 14, 2009, 12:51 PM EDT) -- On Sept. 15, 2009, the United States Bankruptcy Court of the Southern District of New York ordered Metavante Corp. (“Metavante”) to make payments to Lehman Brothers Special Financing Inc. (“LBSF”) under a prepetition interest rate swap agreement guaranteed by Lehman Brothers Holdings Inc. (“LBHI” and, together with LBSF, “Lehman”) after Metavante had suspended ordinary course settlement payments under the swap.[1]

Metavante claimed a contractual right to withhold payment under Section 2(a)(iii) of the 1992 ISDA Master Agreement as a result of Lehman’s bankruptcy.

Despite the clear...
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