SFIG Submits Amicus Brief in Lehman “Flip Clause” Case

Today, November 1, SFIG will submit an amicus brief to the U.S. Court of Appeals for the Second Circuit in the case of Lehman Brothers Special Financing Inc. v. Branch Banking and Trust Co., et al. This is SFIG’s third brief in support of the defendants in this case, this time in response to Lehman’s appeal to the U.S. District Court’s (Southern District of New York) affirmation in March 2018 of the U.S. Bankruptcy Court’s previous dismissal of the case. The case centers on the treatment of a so-called "flip clause" in a securitization waterfall in the event of a bankruptcy – a "flip clause" redirects or reprioritizes cash flow upon bankruptcy, and often comes up in securitizations that include swaps. SFIG's rationale for filing the amicus brief is to voice members’ views that a ruling favorable to Lehman would result in uncertainty detrimental to the structured finance market. This brief was prepared for SFIG by counsel at Freshfields Bruckhaus Deringer

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