546(E) Protects Contracts Beyond The Usual Safe Harbor

Law360, New York (November 19, 2012, 12:35 PM EST) -- Section 546(e) of the Bankruptcy Code is a “safe harbor” provision which restricts a debtor’s ability to recover or “clawback” what would otherwise be “avoidable” payments made to creditors. In the recent case of Lightfoot v. MXEnergy Elec. Inc., 690 F.3d 352 (5th Cir. 2012), the Fifth U.S. Circuit of Appeals followed what has become a recent trend (see “Decisions in Enron and Madoff Cases Confirm Safe Harbor Protections,” International Restructuring NewsWire (February 2012)) in broadly interpreting section 546(e)’s safe harbor protections.

In Lightfoot, Chief Judge...
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