On April 23, 2019, the United States District Court for the Southern District of New York, in fraudulent transfer litigation arising out of the 2007 leveraged buyout of the Tribune Company, ruled on one of the significant issues left unresolved by the US Supreme Court in its Merit Management decision last year (which we addressed in a previous post).  The district court held Tribune’s post-bankruptcy litigation trustee was barred from asserting certain constructive fraudulent transfer claims against former Tribune shareholders based on what Judge Denise Cote termed a “straightforward” application of the Section 546(e) settlement payment safe harbor.  See In re Tribune Co. Fraudulent Conveyance Litigation, No. 12 cv 2652 (DLC), 2019 WL 1771786 (S.D.N.Y. Apr. 23, 2019). In addressing the extent to which a party’s status as a customer of a “financial institution” (as defined in the Bankruptcy Code) affects the applicability of Section 546(e), the district court was the first court post­-Merit Management to squarely address that question.
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In less than 24 hours beginning on May 1, 2019, Sungard Availability Services Capital, Inc., and its affiliates (collectively, “Sungard”) commenced and completed Chapter 11 proceedings in what has been described as the fastest Chapter 11 case ever. Sungard filed its Chapter 11 cases just before 9pm on May 1 in the Bankruptcy Court for the Southern District of New York, White Plains Division, and, before 6pm the next day, Judge Robert Drain entered an order confirming Sungard’s prepackaged Chapter 11 plan.[1] The Sungard debtors were able to obtain this rapid result through extensive pre-filing planning and negotiations, and likely also benefited from assignment of their cases to Judge Drain, who had prior experience in addressing similar, expedited pre-packaged cases.[2]
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