Second Circuit rules Bankruptcy Code’s “safe harbor” provision preempts state law fraudulent transfer claims

On September 19, 2024, the US Court of Appeals for the Second Circuit issued a summary order in which it held that the “safe harbor” provision of Section 546(e) of the Bankruptcy Code preempted a bankruptcy trustee’s state law fraudulent conveyance claims. Holliday v. Credit Suisse Securities (USA) LLC, et al., 21-2543-br.

In so doing, the Second Circuit clarified the protection that the Bankruptcy Code affords certain parties who receive payments from companies in leveraged buyouts and recapitalizations that might otherwise be avoidable under applicable state law when the applicable company commences a bankruptcy case.

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