Peterson v. Somers Dublin Ltd.

Federal 7th Circuit Court
Civil Court
Case Number: 
Nos. 12-2463 et al. Cons.
Decision Date: 
September 6, 2013
Federal District: 
N.D. Ill., E. Div.
Bankruptcy Judge did not err in granting motion for summary judgment by defendants-investors of debtor, even though plaintiff-Trustee asserted that debtor’s payments to defendants, who redeemed shares in Fund operated by debtor, constituted either preferential payment under 11 USC section 547 or fraudulent conveyance under 11 USC section 544. Under section 546(e) of Bankruptcy Code, trustee may not avoid settlement payment or transfer made to financial participant in connection with securities contract, and plaintiff conceded that defendants qualified as “financial participants” when redeeming shares of instant Fund. Ct. further noted that trustee did not invoke exception to prohibition contained in section 546(e), i.e., payments made with actual intent to defraud any entity to which debtor became indebted, even though record suggested that instant Fund eventually played role in Ponzi scheme.