Second Circuit Hears Arguments In Important Test Of Safe Harbor Provisions

On November 5, 2014, the Second Circuit (Judges Winter, Droney, and Hellerstein) held oral arguments in In re Tribune Litigation (Case No. 13-3992) and Whyte v. Barclays Bank PLC (Case No. 13-2653).  As we outlined here, both cases consider the reach of the safe harbor provisions found in section 546 of the Bankruptcy Code that protect certain financial transactions from constructive fraudulent avoidance claims.  The District Court dismissed the plaintiffs' state law constructive fraudulent conveyance claims in both cases, but reached different decisions on the key question of whether the Bankruptcy Code's safe harbor provisions impliedly preempt state law causes of action brought by creditors.  Judge Rakoff held that implied preemption applied in Barclays while Judge Sullivan held that the express language of the safe harbors did not preempt state law claims brought by creditors in Tribune.  The defendants in both cases garnered support from numerous amici, including