(7th Cir. July 28, 2016)
The Seventh Circuit holds that the safe harbor provision of 11 U.S.C. § 546(e) does not apply to a transaction in which an entity that serves as merely a conduit for a pre-petition transfer is the only entity that fits one of the necessary categories of entities in that section. The conduit was a financial institution, which is a type of entity protected by § 546(e). However, neither the debtor nor the transferree were a type of entity that is protected. Thus, the court holds that the safe harbor provision does not apply and reverses the district court judgment. Opinion below.
Attorneys for Trustee: Reid Collins & Tsai LLP, Gregory S. Schwegmann
Attorneys for Defendant: Seyfarth Shaw LLP, Jason J. DeJonker, James B. Sowka