Protection for bankruptcy transfers
Merit Management Group v. FTI Consulting
In brief
The Supreme Court left the Seventh Circuit's judgment in place and sent the case back to the lower court.
- Where it stands
- Decided
Decided 9-0 · February 27, 2018 · Opinion by Justice Sotomayor
- What it’s about
- FTI, Valley View Downs’ trustee, sought to recover a payment Valley View made to Merit Management for shares; Merit argued banks’ role triggered a Bankruptcy Code rule protecting some transfers.
- Who it affects
- The Seventh Circuit's judgment remains in place in FTI's effort to recover Valley View Downs' share-payment from Merit for the bankruptcy estate.
Summary: written with AI from the case record.
What it's about
The Supreme Court ruled intermediary banks did not trigger the rule, agreed with the Seventh Circuit, and sent the case back to the lower court (remanded).
The case asked whether a bankruptcy rule protecting some transfers from recovery applies when financial institutions handle a payment.
Question presented
Whether the safe harbor of 11 U.S.C. § 546(e) prohibits avoidance of a transfer made by or to a financial institution, without regard to whether the institution has a beneficial interest in the property transferred, consistent with decisions from the Second, Third, Sixth, Eighth, and Tenth Circuits, but contrary to decisions from the Eleventh Circuit and now the Seventh Circuit.
What the Court decided
Holding
Judgment is affirmed and case remanded. Sotomayor, J., delivered the opinion for a unanimous Court.
- Result
- Affirmed
The vote
What's next
The case returns to the lower court for further proceedings.
Each side's argument
- FTI Consulting
- As Valley View Downs' trustee, FTI sought to recover the payment from Merit for the bankruptcy estate.
- Merit Management Group
- Merit argued that banks' involvement brought the payment within a Bankruptcy Code rule protecting some transfers from recovery.
Documents
Docket activity
New analysis added
AI analysis generated: Case Briefing
AI analysis generated: Decision Record
Case data updated: summary, question_presented, generation_metadata
Case data updated: question_presented, extraction_metadata
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Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.