Supreme Court Clarifies Power to Claw Back Transfers Made Through Financial Institutions

American Bankruptcy Institute, April 27, 2018– A February 27, 2018, decision by the U.S. Supreme Court resolved a split in the circuit courts by clarifying that a bankruptcy trustee, creditor committee, and other bankruptcy estate entity may claw back preferences and constructive fraudulent transfers involving the purchase of securities even though the transaction was effectuated by depositing funds or securities with financial institutions. The Court’s decision in Merit Management Group, LP v. FTI Consulting, Inc., held that Section 546(e)’s safe harbor provision requires courts to look to the transaction being challenged and determine whether the defendant in the avoidance action – the ultimate recipient of the funds – is a “covered” entity under the statute. The analysis does not focus on the constituent components of the transaction that may involve financial institutions.

Read Full Article Here.

Report a Fraud or

Contact an Attorney


Fill out the form below to receive a free and confidential initial consultation.

No attorney/client relationship will be formed by sending an email through this site or receiving a response from Bragar Eagel & Squire, P.C. If you communicate with us through this website or otherwise in connection with a matter in which we do not already represent you, your communication may not be treated as privileged or confidential. Please avoid sending any sensitive or confidential messages by email.

*I accept

© 2017-2020 BRAGAR EAGEL & SQUIRE, P.C.