Fraudulent Transfer Claims: LBOs and Sec. 546(e), Law Partner Profit Clawbacks, Jurisdiction, and Limiting Damages

Leveraging Latest Case Law Developments in Bringing and Defending Against Claims in Fraudulent Transfer Recovery Litigation

Supreme Court issues narrow ruling in Bellingham/Arkison

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


Conducted on Tuesday, July 22, 2014

Recorded event now available

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Program Materials

This CLE webinar will discuss cutting edge topics in fraudulent transfer litigation, including shareholder clawbacks in leveraged buyout transactions, clawbacks of law firm partner “unfinished business profits,” limiting damages in fraudulent transfer recoveries, and an overview of the Supreme Court's ruling in Bellingham/Arkison.

Description

The limits of fraudulent transfer litigation have been tested in the Tribune bankruptcy case, with the most recent ruling from the Southern District of New York allowing creditors to bring state law fraudulent transfer claims against shareholders of the Tribune LBO deal.  

Courts continue to wrestle with the applicability of safe harbors to privately held securities. In 2013, the Western District of New York Bankruptcy Court held that the safe harbor applied to private company LBOs, in direct contradiction to the Southern District of New York's ruling in McMenanmin's Grill.

The recent ruling in Crescent Resources Litigation Trust, in which the court reduced a $1.2 billion fraudulent transfer claim against Duke Energy by $961 million, provides ammunition to defendants seeking to limit damages in fraudulent transfer and preference actions.

The limits of asset recovery actions have been tested in litigation attempting to clawback “unfinished business profits” from partners of bankrupt firms on the theory that a Jewel waiver inserted shortly before firm dissolution constitutes a fraudulent transfer.

Listen as our authoritative panel of bankruptcy practitioners discusses recent developments in fraudulent transfer litigation involving payments to shareholders in LBO deals, clawbacks of law firm partner “unfinished business profits,” and the arguments for limiting damages in fraudulent transfer recoveries. The panel will also provide an overview of the Supreme Court's ruling in Executive Benefits Insurance Agency v. Arkison.

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Outline

  1. Leveraged buy-out transactions and the limitations of Section 546(e) safe harbors (Tribune)
  2. Limits on fraudulent transfer damages (Crescent Resources Litigation Trust)
  3. Clawbacks from law firm partner profits on “unfinished business”
  4. Overview of Supreme Court’s ruling in Executive Benefits Insurance Agency v. Arkison

Benefits

The panel will review these and other key questions:

  • What are the limitations on protections for shareholders in LBO deals?
  • What are the theories for recovery of “unfinished business” profits from partners of bankrupt law firms?
  • What is the potential impact of the Crescent Resources Litigation Trust ruling on the longstanding rule in Moore v. Bay on the scope of the damages recoverable in fraudulent transfer actions?

Faculty

Corey R. Weber
Corey R. Weber

Partner
Ezra Brutzkus Gubner

Mr. Weber focuses on corporate bankruptcy law and litigation, business litigation and commercial collection...  |  Read More

Michael E. Comerford
Michael E. Comerford

Of Counsel
Milbank Tweed Hadley & McCloy

Mr. Comerford is a member of the firm’s Financial Restructuring Group and has extensive experience in...  |  Read More

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