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“[L]ack of good faith in a SIPA [Securities Investor Protection Act] liquidation applies an inquiry notice, not willful blindness, standard, and that a SIPA trustee does not bear the burden of pleading the transferee’s lack of good faith,” held the U.S. Court of Appeals for the Second Circuit on Aug. 30, 2021 in In re Bernard L. Madoff Investment Securities, LLC, 2021 WL 3854761, 91 (2d Cir. Aug. 30, 2021) (Madoff). Reversing the district court’s imposition of federal securities law in this fraudulent transfer action, the Second Circuit applied federal bankruptcy law when holding that good faith is an affirmative defense under sections 548(c) and 550(b)(1). It rejected the district court’s requiring the trustee to” bear the burden of pleading the transferee’s lack of good faith,” Id. at 17, refusing to depart “from the well-established rule that the defendant bears the burden of pleading an affirmative defense.” Id. at 57.
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By Michael L. Cook
This installment of our appellate practice series reviews recent cases addressing the equitable mootness doctrine. The issue ultimately often turns on whether it is practical and fair for an appellate court to review an appeal on the merits, enabling that court to avoid review altogether.
By Francis J. Lawall and Patrick M. Ryan
At first glance, Chapter 15 might appear to have the relatively minor role of staying actions against U.S. assets while the main foreign proceeding moves forward. However, as one recent case out of the Southern District of New York demonstrates, Chapter 15 carries the potential to significantly impact not only the main foreign bankruptcy, but civil litigation in the United States as well.
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