Oral argument in FTI v. Merit, S.Ct docket no. 16-784 (November 6, 2017)


#1

Issue: Whether the safe harbor of Section 546(e) of the Bankruptcy Code 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 U.S. Courts of Appeals for the 2nd, 3rd, 6th, 8th, and 10th Circuits, but contrary to the decisions from the U.S. Courts of Appeals for the 7th and 11th Circuits. [source]


#2

I am not sure whether to recategorize this in a way that speaks more directly to the irrational absurdity of the EIP867 drama, but from a technological standpoint, this is basically material on the subject of critical conduits: more obliquely, maybe systemically important financial institutions (SIFI). How to deal with formal equity by institutional design is a research subject unto itself.

This reply is my way of disclosing a bias: that it appears to me to be a vulnerability that the polycentric deliberative system is working with very primitive and limited “procedural fairness” logics that raise concerns beyond, like, “side effects,” and start to look like destructive availability cascades [Kuran & Sunstein 2007].

I like to think am not trying to be the Shingy of blockchain infrastructure. Emphasis on “not trying,” I suppose. Anyway, if this comment replying to a post relaying the minutes a meeting of some reasonably skilled pattern-recognizers is out of the scope of a development board, that is just fine, and it would be more enlightening to read this discussion as about modularity and reversibility in payment systems more generally anyway.


#3

Back on topic, kind of:

[Brubaker 2017] Understanding the scope of the securities safe harbor through the concept of the transfer sought to be avoided

ABSTRACT: Bankruptcy Code § 546(e) contains a safe harbor that prevents avoidance of a securities settlement payment. To date, pleas for sane limits on the scope of the § 546(e) safe harbor have focused upon what kinds of transactions should be considered a “settlement payment.” That language, however, is not the primary means by which § 546(e) both reveals its manifest object and correspondingly limits its reach thereto. Section 546(e) rationally constrains its scope via the statutory specification (the meaning of which the Supreme Court will consider in the pending case of Merit Management Group v. FTI Consulting) that the safe harbor only applies (because it need only apply) if the “transfer” sought to be avoided was allegedly “made by or to (or for the benefit of)” a protected securities market intermediary, such as a stockbroker or a financial institution.

Ascertaining the meaning and function of that determinative scope language requires an understanding of (1) the concept of a “transfer” as the fundamental analytical transaction unit throughout the Code’s avoidance provisions, and (2) the relationship between that avoidable “transfer” concept and the inextricably interrelated concepts of who that “transfer” is “made by or to (or for the benefit of).” By its express terms, § 546(e) only shields a challenged “transfer” from avoidance if (1) that transfer was “made by” a debtor-transferor who was a qualifying intermediary, “or” (2) a party with potential liability—because the challenged transfer allegedly was made “to or for the benefit of” that party—was a protected intermediary.


#4

Thanks for all of these!

Though I do think it would be better to combine the articles into a single thread so it doesn’t unintentionally clutter the entire board.


#5

Happily. Getting a feel for the data structure, moving fast and trying not to break the feel of the game.

δ₁: I don’t know if the discoverability of a “delete” function is low, or just for object-blind ditzes like me, but I couldn’t seem to merge Aghion & Tirole into Williamson (to err on the side of clutter caution, if after the fact)…