Back to square one: How Tribune revived the settlement payment safe harbor to trustee avoidance powers in the context of leveraged buyouts

Abstract

This Article reviews the history of the Code section 546(e) safe harbor, highlighting the circuit split that was resolved by Merit Management. The Article then focuses on the current framework for the analysis, as it was articulated in Tribune. It reviews case law on the interpretation of statutory terms such as "financial institution," "settlement payment," and securities contract." The Article highlights why public securities transactions need protection, whereas transfers of securities of closely held companies should be subject to avoidance. Finally, to prevent further uncertainty regarding the application of the statute, the Article suggests that Congress amend section 546(e). The settlement payment safe harbor should shield from avoidance only transactions involving public markets of securities. That was the original purpose for the safe harbor.