About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

26 Am. Bankr. Inst. L. Rev. 1 (2018)

handle is hein.journals/abilr26 and id is 1 raw text is: A NOTE TO CONGRESS: AMEND SECTION 546(e) OF THE BANKRUPTCY CODE TO HARMONIZE THE UNDERLYING POLICIES OF FRAUDULENT CONVEYANCE LAW AND PROTECTION OF THE FINANCIAL MARKETS PETER V. MARCHETTI ABSTRACT This Article discusses and analyzes recent developments regarding section 546 of the Bankruptcy Code. Several important policies underpin the Bankruptcy Code, including, inter alia: (i) fostering the debtor's reorganization of its financial affairs; and (ii) treating similarly situated creditors ratably in accordance with an established priority scheme. To reach these goals, the Bankruptcy Code contains provisions that allow the debtor to claw back transfers referred to as 'referential transfers and 'fraudulent transfers. These clawback provisions are aimed at preventing certain creditors from: (i) 'icking the debtor apart within a close temporal proximity to the date ofits bankruptcy filing; and (ii) receiving either actual or constructive fraudulent transfers from the debtor. Over the past three decades, however, Congress has amended the Bankruptcy Code to reflect an additional policy protection of the financial markets from systemic risk. To accomplish this goal, Congress enacted and expanded section 546(e) of the Bankruptcy Code (the Section 546(e) Safe Harbor'9 to insulate various types of financial transactions from the Bankruptcy Code's clawback provisions. Congress's intent underlying the Section 546(e) Safe Harbor is to prevent a ripple effect offinancial losses to financial institutions and clearinghouses that function as intermediaries in interconnected financial transactions. Several recent cases of apparent first impression have demonstrated that the precise parameters of the Section 546(e) Safe Harbor are not clear. Indeed, there is a current split within the federal circuits on several crucial issues involving the Section 546(e) Safe Harbor. Several of these cases involve multi-billion dollar disputes connected to leverage buyouts (LBO's'9, Ponzi schemes and derivative transactions. Several decisions applied the Section 546(e) Safe Harbor more broadly than Congress intended. Namely, there is a lack of clarity as to whether the Section 546(e) Safe Harbor: (i) insulates a settlement payment by a debtor to a holder of securities issued by the debtor from a constructive fraudulent transfer or a preferential transfer simply because a financial institution acted as a conduit (such . 0Peter V. Marchetti, 2017. Assistant Professor of Law, Thurgood Marshall School of Law-Texas Southern University. The views and opinions expressed herein are solely those of the author. I thank Thurgood Marshall School of Law-Texas Southern University for the Summer Research Stipend that facilitated this Article. I thank my research assistants Nedialka Gagalieva and Alex W. Chalk for their superb research and editing assistance for this Article. Likewise, I thank the American Bankruptcy Institute Law Review editors and staff for their assistance in editing this Article. I

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most