Nine West Clawback Ruling Fortifies Bankruptcy Safe Harbor

By Matthew Gold, Dov Kleiner and Marc Rosen (September 28, 2020, 3:18 PM EDT) -- A recent decision by the U.S. District Court for the Southern District of New York confirms that the defendant-friendly holding of the U.S. Court of Appeals for the Second Circuit's 2019 decision in In re: Tribune Company Fraudulent Conveyance Litigation will be applied broadly to benefit defendants and rejects efforts by the plaintiffs to work around Tribune.

The decision, In re: Nine West LBO Securities Litigation, reaffirms the vitality of the bankruptcy safe harbor as a defense against clawback actions against shareholders that tender their shares in a leveraged buyout, or LBO, and provides an instructive case study of the plaintiffs' unsuccessful efforts...

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