Bankruptcy — preferential transfers

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U.S. Court of Appeals for the Seventh Circuit

Civil

Bankruptcy — preferential transfers

Where the bankruptcy court authorized a transfer of assets, it cannot later be ordered returned as a preferential transfer.

“If we were to conclude now that the authorized transfer was not authorized after all, FCStone would face the resulting liquidity crunch now. The losses would fall not on its clients and creditors of 2007 but on its later clients and creditors, meaning that losses would fall quite differently than they would have in 2007. In other words, the bankruptcy court’s later interpretation of its order would change the allocation of the loss stemming from Sentinel’s bankruptcy, shifting it away from one group of FCStone customers and onto another. FCStone, the other FCMs, their customers, and all other affected parties have strong reliance interests in not allowing the bankruptcy court or the trustee to rewrite history in this way.”

Reversed.

13-1232 & 13-1278 Grede v. FCStone LLC

Appeals from the United States District Court for the Northern District of Illinois, Zagel, J., Hamilton, J.