FIA along with the International Swaps and Derivatives Association submitted an amicus brief, in support of defendants, in the U.S. District Court in the Southern District of New York on a bankruptcy issue with broad implications for the derivatives industry. The amicus brief urges the court to grant Defendant's motion to dismiss the complaint in in Kahle v. Cargill, Inc., arguing that the swap agreement safe harbor at issue in the U.S. Bankruptcy Code (11 U.S.C. § 546(g)) preempts state-law fraudulent-conveyance claims brought by Plaintiff, an assignee in state insolvency proceedings. A contrary ruling by the court could undermine the effectiveness of the safe harbor for swaps, as well as related safe harbors for futures and forwards, which market participants rely on to enforce netting and closeout provisions and mitigate credit risk in transaction and clearing relationships.
