Merit Management Group, LP v. FTI Consulting, Inc.

(U.S. Sup. Ct. Feb. 27, 2018)

The Supreme Court holds that the safe harbor of 11 U.S.C. § 546(e) applies only to the transfer that is sought to be avoided, and is not applicable based solely on intermediary transfers. Section 546(e) exempts from a trustee’s avoidance powers certain types of transfers (e.g., settlement payments as defined in § 101) to certain protected parties, including financial institutions. If the transfer sought to be avoided is between two non-protected parties, the safe harbor does not apply, even if there is an intermediary or conduit party that is a protected party. Opinion below.

Justice: Sotomayor

2018-02-27 – merit management v. fti consulting

Author: Matt Lindblom

FTI Consulting, Inc. v. Merit Management Group, LP

(7th Cir. July 28, 2016)

The Seventh Circuit holds that the safe harbor provision of 11 U.S.C. § 546(e) does not apply to a transaction in which an entity that serves as merely a conduit for a pre-petition transfer is the only entity that fits one of the necessary categories of entities in that section. The conduit was a financial institution, which is a type of entity protected by § 546(e). However, neither the debtor nor the transferree were a type of entity that is protected. Thus, the court holds that the safe harbor provision does not apply and reverses the district court judgment. Opinion below.

Judge: Wood

Attorneys for Trustee: Reid Collins & Tsai LLP, Gregory S. Schwegmann

Attorneys for Defendant: Seyfarth Shaw LLP, Jason J. DeJonker, James B. Sowka

2016-07-28 – fti consulting v merit management

Author: Matt Lindblom