Alerts

Bankruptcy Court Orders Swap Counterparty to Pay Lehman Brothers Despite Event of Default

September 25, 2009

The United States Bankruptcy Court for the Southern District of New York entered an order on Sept. 17, 2009, granting a motion filed by Lehman Brothers Special Financing Inc. (“LBSF”) to compel Metavante Corporation (“Metavante”) to continue to make payments to LBSF under an ISDA Master Agreement. The court’s ruling provided that a non-defaulting swap participant that did not terminate its swap agreement following a bankruptcy proceeding by its counterparty must continue to make payments under such agreement (including past-due payments) in order to comply with the “safe harbor” provisions of the United States Bankruptcy Code (the “Code”).