Dist. Ct. erred in denying trustee’s request to avoid under sections 544, 548(a)(1)(b) and 550 of Bankruptcy Code $16.5 million payment that debtor made to defendant for purchase of stock, even though defendant argued that said transfer was protected from being undone by safe harbor provisions in section 546(e) of Bankruptcy Code, because: (1) instant transfers of money passed through financial institutions from debtor to defendant; and (2) section 546(e) precludes trustee from avoiding transfer that is margin payment or settlement payment made “by or to” financial institution. Ct. found that safe harbor provisions contained in section 546(e) applied only if transfer was made by debtor to financial institution to pay off debt owed to financial institution, and not where financial institution was merely passing money from debtor to third-party.
Federal 7th Circuit Court
Civil Court
Bankruptcy