In Re Comark, Debtor. Sam Jonas, Chapter 7 Trustee v. Resolution Trust Corporation, as Receiver for Greatamerican Federal Savings & Loan Assoc.

In Bankruptcy Court, the trustee for Co-mark, a limited partnership, sought to recover the value of an alleged preferential transfer to GreatAmeriean Federal Savings & Loan Association. The transfer occurred when Comark returned $9.25 million worth of securities to GreatAmeriean that were “additional margin” in a securities transaction that the parties cancelled. On cross motions for summary judgment, the Bankruptcy Court ruled that while the transfer was a preferential transfer it was not avoidable because the return of the securities was either a “margin payment” or a “settlement payment.” The district court affirmed.

FACTS

This appeal arises from an adversary proceeding between the trustee (“Comark”) for the debtor Comark and the receiver (“GreatAmeriean”) for the GreatAmeriean Federal Savings & Loan Corporation. Although the transactions involved in this appeal are complex, the facts can be sorted out relatively easily.

Comark was involved in a sophisticated business of trading in government securities, known as “Ginnie Maes” (“GNMAs”). Each GNMA represents an interest in a pool of home mortgages. Comark entered into repurchase agreements (“Repos”) and reverse repurchase…