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Fairfield Sentry IV
3 provide insight into, among other things, the interplay between the safe harbor provision of section 546(e)
4 of the Bankruptcy Code (the “Safe Harbor”) and chapter 15. Relying on section 561(d)
5 of the Bankruptcy Code, which makes the Safe Harbor applicable to chapter 15 cases “to limit avoidance powers to the same extent as in a proceeding under chapter 7 or 11,” the court extended the Safe Harbor to bar the avoidance of certain foreign transactions based on foreign law claims which resembled preference claims under section 547(b)
6 of the Bankruptcy Code and constructive fraudulent transfer claims under state and federal law. However, when the defendants attempted to use the Safe Harbor to bar certain constructive trust claims under foreign law, the court did not agree, finding that the constructive trust claims proceeded on different theories and different proof than the preference and constructive fraudulent transfer claims, denying app
In March 2021, Dentons published, “
Fairfield Sentry:
A look into the application of the US safe harbor provisions and the Hague Convention to foreign claims,” (available here) which examined the December 14, 2020 memorandum decision issued by now-retired Judge Stuart Bernstein of the US Bankruptcy Court for the Southern District of New York (the “Court”) in
In re Fairfield Sentry Ltd. (the “
Fairfield Sentry Decision”).
1 Specifically, the Court (as such, the “
Fairfield Sentry Court”) held that the safe harbor provisions of the US Bankruptcy Code apply in chapter 15 cases to bar foreign law avoidance claims arising under BVI law to the extent they are analogous to the categories of US avoidance claims which are exempted as safe-harbored.
Fairfield Sentry: A look into the application of the US safe harbor provisions and the Hague Convention to foreign claims | Dentons jdsupra.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from jdsupra.com Daily Mail and Mail on Sunday newspapers.
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The U.S. Bankruptcy Court for the S.D.N.Y. provided further
clarity in the Fairfield Sentry litigation on whether foreign
constructive trust claims are avoidance claims in assessing the
applicability of Sections 546(e) and 561(d), the U.S. bankruptcy
safe harbor laws which generally immunizes securities transactions
from bankruptcy avoidance actions. Judge Stuart M. Bernstein - in
one of his last decisions before retiring from the bench - authored
the opinion.
Denying a motion by defendants to reconsider his December 14,
2020 decision on the topic, Judge Bernstein reaffirmed that