Willa Bruckner and Will Sugden presented this webinar hosted by Strafford. The Bankruptcy Code contains many safe harbor provisions that exempt derivatives from automatic stay, assumption and rejection of executory contracts, and the avoiding powers. Bankruptcy practitioners must have thorough knowledge of the safe-harbor rules, whether representing creditors or debtors. The various Lehman bankruptcy cases have addressed a number of issues relating to the termination of the derivatives contracts held by Lehman counterparties. These cases set precedent or are very influential in determining how these contracts are negotiated and investments structured.
Counsel representing companies that use derivatives products must insure that their clients' trading documents meet the applicable safe-harbor definitions and contain the appropriate rights and remedies in the event of insolvency of a significant counterparty. Willa and Will discussed the special treatment accorded derivatives contracts in bankruptcy, how to proceed with derivatives trading agreements in the wake of a bankruptcy filing and best practices for minimizing counterparty risk.