Companies that enter into leveraged buyouts (LBO) that fail typically end up in bankruptcy. Section 546(e) of the Bankruptcy Code1 acts as a “safe harbor” to protect recipients of certain settlement payments from law suits by the bankruptcy estate representative (e.g., the debtor). Case law2 has interpreted this “safe harbor” provision to protect public shareholders from being sued by the bankruptcy estate representative for constructive fraudulent transfers3 in respect of payments made for their tendered shares.4
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