A Test Balloon For Section 546(e) Interpretation

Law360, New York (October 4, 2013, 10:37 AM EDT) -- On Sept. 23, 2013, U.S. District Judge Richard Sullivan of the Southern District of New York issued a decision with potential implications for the interpretation of Section 546(e) of the Bankruptcy Code, the statute that protects “settlement payments” in securities transactions from avoidance claims. In a 16-page decision, the court dismissed state-law constructive fraudulent conveyance claims brought by creditors seeking to avoid payments made to former shareholders of the Tribune Company during the company’s 2007 leveraged buyout.

The court found that the plaintiffs — all individual...
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