Supreme Court Limits The Avoidance Protection Of Bankruptcy Code §546(E) Where Banks Are Mere Conduits Of Fraudulent Transfers

On February 27, 2018, the United States Supreme Court in the case of Merit Management Group, LP v. FTI Consulting, Inc. settled a long standing split among Federal Circuit Courts by affirming the decision of the Seventh Circuit Court of Appeals holding that the safe harbor provisions of Bankruptcy Code §546(e), which protect certain transfers from avoidance, do not apply in the case where financial institutions, subject to the protection of the statute, are mere conduits of funds and not the parties making or receiving the transfer.