Bankruptcy securities safe harbours explained

Author: | Published: 29 May 2018

Recent case law involving bankruptcies of financial institutions confirm the ongoing viability of the Bankruptcy Code’s securities safe harbours

A New York district court has affirmed, on appeal, the dismissal of an attempt by the Lehman Brothers estate to unwind payments made in connection with a series of collateralised debt obligation (CDO) structures. The decision, Lehman Brothers v Bank of America (In re Lehman Brothers Holdings), provides reassurance to investors that CDO structures like the ones used by Lehman should not be vulnerable to bankruptcy attack in other cases. It also demonstrates the continued vitality of the Bankruptcy Code's securities safe harbours notwithstanding the Supreme Court's recent decision in Merit Management Group v FTI Consulting....