The exercise of a contractual right of a repo participant or financial participant to cause the liquidation, termination, or acceleration of a repurchase agreement because of a condition of the kind specified in section 365(e)(1) of this title shall not be stayed, avoided, or otherwise limited by operation of any provision of this title or by order of a court or administrative agency in any proceeding under this title, unless, where the debtor is a stockbroker or securities clearing agency, such order is authorized under the provisions of the Securities Investor Protection Act of 1970 or any statute administered by the Securities and Exchange Commission. In the event that a repo participant or financial participant liquidates one or more repurchase agreements with a debtor and under the terms of one or more such agreements has agreed to deliver assets subject to repurchase agreements to the debtor, any excess of the market prices received on liquidation of such assets (or if any such assets are not disposed of on the date of liquidation of such repurchase agreements, at the prices available at the time of liquidation of such repurchase agreements from a generally recognized source or the most recent closing bid quotation from such a source) over the sum of the stated repurchase prices and all expenses in connection with the liquidation of such repurchase agreements shall be deemed property of the estate, subject to the available rights of setoff. As used in this section, the term “contractual right” includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right, whether or not evidenced in writing, arising under common law, under law merchant or by reason of normal business practice.
Notes of Decisions
Wells Fargo v. Bear Stearns Co Inc, 945 F.3d 801 (3rd Cir. 2019).
· cites it 5× “§ 562 to apply; (3) whether the safe harbor protections of 11 U.S.C. § 559 can apply to a non-breaching party that has no excess proceeds after exercising the contractual right to liquidate a repurchase agreement; and (4) whether Bear Stearns liquidated the securities at issue…”
Matter of Bevill, Bresler & Schulman Asset, 67 B.R. 557 (D.N.J. 1986).
· cites it 3× “did not take actual possession of the underlying securities neither perfected their interests in the securities under New Jersey law nor acquired any interest under New York law; (4) the Trustee's rights to the securities underlying the reverse repos are superior to those of the…”
Bevill, Bresler & Schulman Asset Mgmt. Corp. v. Spencer Sav. & Loan Ass'n, 878 F.2d 742 (3rd Cir. 1989).
· cites it 4× “§ 546 (f), bars a Chapter 11 trustee from utilizing sections 547 and 548 to recover securities or their proceeds from a repo participant; and Whether section 559 of the Code, 11 U.S. C. § 559, bars a Chapter 11 trustee from claiming the proceeds of a repurchase agreement…”
Massman Constr. Co. v. Dir. of Revenue, 765 S.W.2d 592 (Mo. 1989).
· cites it 2× “11 U.S.C. § 559 , effective Oct. 8, 1984, permits the Repo participant to liquidate the repurchase agreement with the debtor.”
In Re Am. Home Mortg. Holdings, Inc., 411 B.R. 181 (Bankr. D. Del. 2009).
“11 U.S.C. § 559 (emphasis added). 28 . Note that section 559 says nothing about Calyon’s position in this case, i.”
Cohen v. Army Moral Support Fund, 67 B.R. 557 (D.N.J. 1986).
· cites it 3× “did not take actual possession of the underlying securities neither perfected their interests in the securities under New Jersey law nor acquired any interest under New York law; (4) the Trustee’s rights to the securities underlying the reverse repos are superior to those of the…”
Miller v. Bear Stearns & Co. (In re Homebanc Mortg. Corp.), 590 B.R. 69 (D. Del. 2018).
“See 11 U.S.C. § 559 . Bear argues, "[T]he Trustee tacitly acknowledges that the Bankruptcy Court's determinations of the facts surrounding the auction and the lack of market dysfunction, as well as the finding that the auction was in good faith, rational, and in compliance with…”
Tew v. Arizona State Ret. Sys., 69 B.R. 608 (S.D. Fla. 1987).
“See 11 U.S.C. § 559 . Defendant has filed affidavits with the Court detailing such expenses.”
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