12  B 24676, 14 A 00392
In this Chapter 7 adversary proceeding, the Trustee filed an Amended Adversary Complaint seeking to avoid and recover transfers made in connection with a commercial mortgage-backed securitization transaction. The Defendants moved to dismiss, arguing that certain of the transfers were covered by the safe harbor provision of 11 U.S.C. § 546(e).  In response, the Trustee argued that the safe harbor provision did not apply because the transactions at issue involved a two-tiered commercial mortgage loan transaction. The Trustee also disputed that the recipient was a financial institution.  The Court decided in favor of the Defendants, noting that the transactions at issue fit squarely within the broad definition of a securities contract as defined by § 741(7)(A) and used in § 546(e).

Because the parties did not consent to the Court’s entry of a final order on the fraudulent transfer claims, the Court submitted proposed findings of fact and conclusions of law to the district court pursuant to Federal Rule of Bankruptcy Procedure 9033.  On the preferential transfer claim, the Court determined that it had both statutory and constitutional authority to enter its order dismissing the claim, with prejudice.

The Court recommended dismissal of the actual fraud transfer claims without prejudice, because those claims were not plead with specificity as required by Federal Rule of Civil Procedure 9(b).