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Southern District of New York Finds “Safe Harbor” Defense to Fraudulent Transfers Protects Payments to Shareholders in Securities Transactions

May 16, 2019

In In re Tribune Company Fraudulent Conveyance Litigation, No. 11md2296 (S.D.N.Y. Apr. 23, 2019), the U.S. District Court for the Southern District of New York found that payments in a leveraged buyout to shareholders are protected under the Bankruptcy Code’s safe harbor provision, Bankruptcy Code section 546(e). The court held that Tribune, the transferor, and Computershare Trust Company, the intermediary in the leveraged buyout transaction both met the Bankruptcy Code’s definition of “financial institution.” Thus, the payments were made by a financial institution and in connection with a securities contract, which qualified for the Bankruptcy Code’s safe harbor provision.

 

Bankruptcy “Safe Harbor” Fraudulent Transfer Defense Reaffirmed in Tribune LBO Litigation

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