• Payments on Commercial Mortgage-Backed Securities Loans Cannot be Avoided in Bankruptcy
  • December 21, 2016 | Authors: Correy Karbiener; Jonathan M. Sykes
  • Law Firm: Burr & Forman LLP - Orlando Office
  • The Bankruptcy Code gives a trustee the power to avoid pre-petition fraudulent and preference transfers made by a debtor, except that a trustee may not avoid a transfer that is “made by or to (or for the benefit of)” a party enumerated in § 546(e) of the Code “in connection with a securities contract.”1 Although § 546(e) has been applied in various circumstances, there is little court guidance on whether § 546(e) protects transfers made to repay commercial mortgage-backed securities (“CMBS”) loans. One case in particular has applied § 546(e) to dismiss such an avoidance action: Krol v. Key Bank Nat’l Ass’n (In re MCK Millennium Centre Parking, LLC), 532 B.R. 716 (Bankr. N.D. Ill. 2015).