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Bankruptcy Code 546(e) Safe Harbor: Invoking the Customer Defense in Avoidance Actions After Tribune II

Recording of a 90-minute CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, September 22, 2020

Recorded event now available

or call 1-800-926-7926

This CLE course will guide counsel to commercial parties on the interpretation of the safe harbor provisions in Bankruptcy Code Section 546(e) after the Second Circuit's decision in In re Tribune Co. Fraudulent Conveyance Litig., Case No. 13-3992 (2d Cir. Dec. 19, 2019) (Tribune II). The webinar will also review other safe harbors in Section 546.


Section 546(e) of the Bankruptcy Code provides that a trustee may not avoid prepetition certain transfers by or to specific kinds of entities. The list of protected entities include "financial institutions" and "financial participants," but under a 2017 Supreme Court decision, FTI Consulting Inc. v. Merit Mgmt. Gp. L.P., only if the financial institution is a transferee of the transfer the trustee seeks to avoid. This holding was interpreted as severely narrowing the safe harbor under Section 546(e) but left many questions unanswered.

However, on Dec. 19, 2019, the Second Circuit held that the debtor (Tribune) might be a "financial institution" when it is the "customer" of a financial institution that was acting as Tribune's "agent or custodian … in connection with a securities contract."

Tribune II has been heralded as potentially expanding the reach of Section 546(e) safe harbor. Many issues remain open because not every transfer involving a financial institution is protected and not every financial institution may qualify. Many believe that properly structured principal-agent relationships could bring more payments and distributions into the safety of Section 546(e).

Listen as this experienced panel discusses the importance of the Tribune II decision and how it has brought renewed viability to Section 546(e) safe harbor.



  1. Section 546(e)
    1. Protected payments, parties, contracts
    2. Leveraged buyouts
  2. FTI Consulting Inc. v. Merit Mgmt. Gp. L.P.
  3. Tribune II
    1. Defining "customer"
    2. Structuring the principal-agent relationship
  4. Review of Sections 546(f), (g), and (j)


The panel will review these and other key issues:

  • How did Tribune II limit and address the Merit decision?
  • Does the specific type of "financial institution" matter under Section 546(e)?
  • How should parties in leveraged buyouts structure payments?
  • What questions did Tribune II leave open?


Hammer, Brandon
Brandon M. Hammer

Cleary Gottlieb Steen & Hamilton

Mr. Hammer’s practice focuses on financial institutions and transactions.

 |  Read More
Marchetti, Peter
Peter Marchetti

Associate Professor of Law
Texas Southern University

Mr. Marchetti’s teaching and research interests are in the following areas: bankruptcy and reorganization,...  |  Read More

Scott, Sean
Sean T. Scott

Mayer Brown

Mr. Scott represents institutional lenders, bank groups, hedge funds and other creditors in out-of-court workouts and...  |  Read More

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