Mark Holliday, Liquidating Trustee of the BosGen Liquidating Trust v. Credit Suisse Securities (USA) LLC, et al.

In Merit Management Group, LP v. FTI Consulting, Inc., 583 U.S. 366 (2018), this Court held that the “safe harbor” in § 546(e) of the Bankruptcy Code, which protects certain securities-related payments from a trustee’s avoidance powers, applies only to the initial transfer from the debtor to the transferee. This Court referred to that initial transfer as the “overarching transfer” to ensure that the focus of the § 546(e) inquiry is on the substantive transfer the trustee seeks to avoid. The Second Circuit, however, completely misread Merit to hold that the relevant “overarching transfer” was a combination of the initial and subsequent transfers, what it called the “end-to-end transaction.” Thus, with respect to the Second Circuit’'s holding that the subject transfer is within the scope of § 546(e), the Question Presented is: Does the Second Circuit’s holding that courts may collapse an initial transfer with subsequent transfers to bring an initial transfer within the § 546(e) safe harbor conflict with this Court’s decision Merit and expand § 546(e) well beyond the limits imposed by Congress?

A bankruptcy trustee may use § 548(a)(1)(A) of the Bankruptcy Code to avoid a transfer made with the actual intent to defraud creditors. The safe harbor in § 546(e) insulates certain constructive fraudulent transfers from avoidance under other sections of § 548(a), but it does not shield actual-