• Safe Harbor Update: Continued Uncertainty Regarding Applicability of Safe Harbors to Leveraged Buy-Outs of Privately Held Securities
  • August 2, 2013
  • Law Firm: Alston Bird LLP - Atlanta Office
  • A Western District of New York bankruptcy court has held that the safe harbor provisions of section 546(e) of the Bankruptcy Code apply to leveraged buy-outs of privately held securities. See Cyganowski v. Lapides (In re Batavia Nursing Home, LLC), No. 12-1145 (Bankr. W.D.N.Y. July 29, 2013). This holding conflicts with a prior case from a Southern District of New York bankruptcy court, which held that a leveraged buy-out of privately held stock would not be protected by this safe harbor provision unless there is evidence that unwinding the particular transaction would have an adverse effect on the financial markets. See Geltzer v. Mooney (In re MacMenamin’s Grill Ltd.), 450 B.R. 414 (Bankr. S.D.N.Y. 2011).