Lightfoot v. MXEnergy Electric, Inc. (In re MBS Management Services, Inc.)
- Summarized by Richard Corbi , Otterbourg P.C.
- 13 years 7 months ago
- Citation:
- --- F.3d ----, 2012 WL 3125167, (NO. 11-30553) (Aug. 2, 2012 5th Cir.)
- Tag(s):
-
- Ruling:
- The Fifth Circuit Court of Appeals held that the Debtor's payments to the power company were settlement payments exempt from avoidable transfer pursuant to section 546(e) of the Bankruptcy Code. The agreement to provide electricity was a two-year futures contract for the sale of electricity by a broker, MX, at a fixed price. The terms of the Agreement tracked the Bankruptcy Code's definition of a “forward contract”. Section 546(e) of the Bankruptcy COde exempts "forward contracts" from avoidance.
- Procedural context:
- The Fifth Circuit Court of Appeals affirmed the district court and bankruptcy court's ruling that the payments made on account of a "forward contract" expressly exempt from the Bankruptcy Code's preference provision under section 546(e).
- Facts:
- The Trustee of MBS Management Services, Inc. ("MBS" or the "Debtor"), a management company for apartment complexes, appealed the judgment rejecting his claim that payments made by the Debtor to MXEnergy Electric, Inc. ("MX") to reimburse MX for supplying electricity to the complexes were avoidable preferences. In a December 12, 2005 agreement (the "Agreement"), MBS agreed to purchase the "full electric requirements" for specifided properties from Vantage Power Services, LP ("Vantage") for 24 months. In 2007 Vantage sold its electrical service agreements in Texas to MX. In August 2007, MBS paid $156,345.93 to MX to cover its affiliates' past-due electric bills. MBS filed for chapter 11 bankruptcy protection on November 5, 2007. The Trustee sought to recover the $156,345.93 as an avoidable preferential transfer under section 547(b) of the Bankruptcy Code.
- Judge(s):
- Jones, Owen, Higginson
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