Section 546(e) of the Bankruptcy Code has engendered more than its fair share of litigation. Section 546(e) provides a safe harbor to exempt certain types of financial contracts from the reach of the automatic stay and the avoidance powers of the code.
Congress enacted Section 546(e) "to minimize displacement caused in the commodities and securities market in the event of a major bankruptcy affecting those industries." The section provides that a trustee in bankruptcy may not avoid a transfer that is a "settlement payment" by a financial institution, financial participant or securities-clearing agency. On its face, the code’s definition of "settlement payment" is not very helpful: A settlement payment is "a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment or any other similar payment commonly used in the securities trade."
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
