Opioid Master Disbursement Trust II v. Citadel Securities LLC, et al.

Summary

The United States District Court for the District of Delaware affirmed summary judgment for financial institutions in litigation seeking to recover Mallinckrodt PLC's allegedly fraudulent stock-repurchase payments. The court held that payments made to complete intended securities transactions may qualify as settlement payments under the Bankruptcy Code's 11 U.S.C. § 546(e) safe harbor even when the underlying transactions are void ab initio under Irish law. The court also concluded that the transfers were made in connection with securities contracts.

Holdings

1. Yes. Payments made to complete intended securities transactions may qualify as settlement payments under § 546(e) even when the underlying contracts are void ab initio and the securities transactions never became legally effective.
2. No. The distinction between void and voidable transactions does not exclude real payments from § 546(e)'s safe harbor.
3. Yes. The challenged transfers were made in connection with securities contracts because Mallinckrodt entered into purchase agreements with brokers under which the brokers executed the share repurchases.

Questions Presented

1. Whether payments made for stock repurchases that were allegedly void ab initio under Irish law can qualify as settlement payments protected by 11 U.S.C. § 546(e).
2. Whether the challenged transfers were made in connection with securities contracts and therefore independently protected by 11 U.S.C. § 546(e).
3. Whether summary judgment for the appellees was proper.

Disposition

affirmed