2007 Winter Leadership Conference Committee Agenda
ABI’s 19th Annual Winter Leadership Conference, which will be held Dec. 6-8, 2007 at the Westin Mission Hills Resort in Rancho Mirage, Calif., will feature two panels that will discuss hedge funds’ involvement in bankruptcy cases.
The committee meeting will be jointly held with the Investment Banking, Financial Advisors and Professional Compensation Committees, on Friday, Dec. 7, from 9:30 - 11:00 am. The first panel is titled “Hedge Fund Competition for Control of Public Chapter 11 Debtors and Their Reorganizations (Or, Perhaps More Currently Stated, Will the Fed Keep the Ball in Play?).” The second panel, titled “Loan-to-Own Strategies of Hedge Funds and Private Equity Firms,” will convene immediately following a 15-minute intermission.
Disputes over proper statutory construction of the Code have often pitted strict statutory constructionists against those that hold a more practical, holistic view of bankruptcy law. A split in authority over the proper interpretation of §546(e) of the Code is another example of such a statutory construction dispute. Section 546(e) provides a defense to certain fraudulent conveyance actions that seek to avoid pre-petition transfers in connection with securities transactions. There has been a wide range of opinions in the case law discussing the scope of the transactions to which §546(e) applies. The courts are split as to whether this defense is limited only to transactions involving publicly-traded securities or applies to transactions involving privately held securities as well.
Section 546(e) establishes an absolute defense to certain fraudulent conveyance actions, providing in relevant part that “the trustee may not avoid a transfer that is a margin payment…or a settlement payment, as defined in §§101 or 741 of this title, made by or to a commodity broker, forward contract merchant, stockbroker, financial institution, financial participant or securities clearing agency….”[1] This defense applies to payments in securities transactions that are made through a financial institution, which would otherwise be avoidable as constructive fraudulent conveyances under §548(a)(1)(B) or §548(b) of the Bankruptcy Code or as constructive and intentional fraudulent conveyances under state law pursuant to §544 of the Bankruptcy Code. The defense is not available for intentional fraudulent conveyances under §548(a)(1)(A).[2]