Safe From Avoidance: Electricity Requirements Contracts

Law360, New York (September 10, 2012, 12:40 PM EDT) -- The Fifth Circuit in MBS Mgmt. Serv. Inc. v. MXEnergy Elect. Inc., No. 11-30553 (5th Cir. Aug. 2, 2012) recently provided some guidance on whether an electricity requirements contract is a forward contract that is exempt from avoidance pursuant to Section 546(e) of the Bankruptcy Code. The answer, at least on the facts of MBS Mgmt., is yes.

MBS Management Services Inc. was a provider of management services for apartment complexes. It entered into a contract with Vantage Power Services LP to purchase full electric requirements...
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