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On April 19, 2021, the U.S. Supreme Court declined to hear the appeal of a landmark 2019 decision issued by the U.S. Court of Appeals for the Second Circuit regarding the applicability of the Bankruptcy Code s safe harbor for certain securities, commodity, or forward contract payments to prevent the avoidance in bankruptcy of $8.3 billion in payments made to the shareholders of Tribune Co. as part of its 2007 leveraged buyout ( LBO ).
In its 2019 ruling, the Second Circuit reaffirmed an earlier decision that creditors state law fraudulent transfer claims arising from the LBO were preempted by the safe harbor set forth in section 546(e) of the Bankruptcy Code.
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Introduction
One year ago, we wrote that the large business bankruptcy landscape in 2019 was generally shaped by economic, market, and leverage factors, with notable exceptions for disastrous wildfires, liabilities arising from the opioid crisis, price-fixing fallout, and corporate restructuring shenanigans.
The year 2020 was a different story altogether. The headline was COVID-19.
The pandemic may not have been responsible for every reversal of corporate fortune in 2020, but it weighed heavily on the scale, particularly for companies in the energy, retail, restaurant, entertainment, health care, travel, and hospitality industries. Mandatory shutdowns beginning in the spring of 2020 wreaked havoc on the bottom lines of thousands of companies confronting a precipitous drop in demand for their products and services. Some were able to weather the worst of the storm with packages of government assistance or by adapting their business models to meet the unique challenges of the pandemi
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