Seventh Circuit Reads Bankruptcy Safe Harbor Broadly

The United States Court of Appeals for the Seventh Circuit, on March 19, 2014, held that a corrupt debtor’s pre-bankruptcy cash transfer to a commod­ity broker was a “settlement payment” made “in connection with a securities contract,” thus falling “within [Bank­ruptcy Code] § 546(e)’s safe harbor” and insulating the transfer from the trustee’s preference claim. Grede v. FC­Stone, LLC (In re Sentinel Management Group, Inc.), 2014 WL 1041736, *7 (7th Cir. Mar. 19, 2014). In this article, SRZ partner Michael L. Cook discusses the Seventh Circuit’s decision.