'Settlement Payments' Ruling Has Broad Implications

Law360, New York (May 28, 2008, 12:00 AM EDT) -- In a decision with potentially broad implications, a U.S. district court judge in the Western District of Michigan has affirmed a bankruptcy court decision that extended the protection for "settlement payments" under 11 U.S.C. §546(e) to payments made to former shareholders of a privately held company in a leveraged buyout transaction.

Therefore, the payments could not be avoided as constructive fraudulent conveyances pursuant to sections 544 and 550 of the Bankruptcy Code and the Michigan Uniform Fraudulent Transfer Act.

In the recent decision of QSI Holdings...
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