Electricity Agreement A 'Forward Contract,' 5th Circ. Rules

Law360, New York (August 3, 2012, 6:47 PM EDT) -- A requirements contract for supplying electricity qualifies as a forward contract and is therefore exempt from preference actions in bankruptcy, the Fifth Circuit ruled Thursday, agreeing with a lower court that a bankrupt property manager can't recoup electricity payments from its utilities supplier.

In a published opinion, a three-judge panel said bankrupt MBS Management Services Inc., which manages apartments in Louisiana and Texas, can't recoup $156,345.93 in bills to MXEnergy Electric Inc. because the payments were a type of forward contract exempt from avoidance actions in...
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