U.S. District Court Affirms The Lehman Bankruptcy Court's Swedbank Decision Regarding The Scope Of The Safe Harbor Provisions Of Sections 560 And 561 Of The Bankruptcy Code

This Alert Memo reviews the January 28th decision of the United States District Court for the Southern District of New York affirming the Lehman Bankruptcy Court’s Swedbank decision, which held that mutuality is a prerequisite to the exercise in bankruptcy of a contractual right of setoff under a derivatives contract, notwithstanding the absence of an explicit mutuality requirement in Sections 560 and 561.