Lehman Court At Odds With Itself Over Swap Safe Harbor

Law360, New York (January 16, 2014, 12:48 AM EST) -- In Michigan State Housing Development Authority v. Lehman Brothers Derivatives Products Inc., et al. (In re Lehman Brothers Holdings Inc. et al.) (Michigan State Housing),[1] the U.S. Bankruptcy Court for the Southern District of New York recently held that a provision in a swap agreement that shifted the methodology for calculating termination amounts upon the debtor counterparty’s bankruptcy was enforceable under the Bankruptcy Code’s safe harbor for liquidating, terminating and accelerating swap agreements.

This decision is significant in that it affirms that the safe harbor for...
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