Judge Jesse Furman
In October 2007, shortly before it sought Chapter 11 protection, Quebecor World (USA) Inc. (QWUSA) paid more than $376 million to buy and redeem a series of private placement notes issued in 2000 by its affiliate Quebecor World Capital Corp. At issue was whether those payments could be “avoided” or recaptured as “preferential” transfers, or whether they were protected from avoidance as “settlement payments” or as transfers “in connection with a securities contract.” Relying on the Second Circuit’s decision in In re Enron Creditors Recovery Corp v. Alfa S.A.B. de C.V. bankruptcy court held the payments protected as both settlement payments and transfers in connection with a securities contract. District court affirmed on appeal by the committee representing QWUSA’s unsecured creditors. Bound by Enron, it concluded the payments qualified as “settlement payments” under Bankruptcy Code §546(e). For reasons different than those found by the circuit, the court also found that the payments qualified as transfers in connection with a securities contract. The transaction at issue was a “purchase” or “repurchase” of the notes rather than a “redemption.”
