Bankruptcy Court Rules on Applicability of Safe Harbors and UCC Article 9 to Repurchase Agreements

May 29, 2008

Last Friday, the United States Bankruptcy Court for the District of Delaware issued an opinion in American Home Mortgage Investment Corp. v. Lehman Bros. (In re American Home Mortgage Holdings, Inc.), Adv. No. 07-51739, 2008 WL 2156323 (Bankr. D. Del. May 23, 2008), an adversary proceeding brought against Lehman Brothers Inc. and Lehman Commercial Paper Inc. The Court held that Sections 555 and 559 of the Bankruptcy Code were applicable to a repurchase agreement for BBB and Baa2-rated subordinated notes secured by mortgage loans. The court also held that the disposition of the notes was not governed by Article 9 of the UCC. Attached is an alert memorandum concerning the opinion. Do not hesitate to contact us with any questions.