Thacher Proffitt has published an article entitled American Home Mortgage Investment Corp. v. Lehman Bros. Inc. : Bankruptcy Court Broadens Repurchase Agreement Safe Harbors to Include Subordinated Notes Secured by Mortgage Loans and Limits the Application of Article 9 of the UCC (click title for link to pdf).
A summary of the article:
On May 23 2008, in American Home Mortgage Investment Corp. v. Lehman Brothers, Inc., the United States Bankruptcy Court for the District of Delaware held that a transaction involving the purchase and sale of subordinated notes secured by mortgage loans was a "repurchase agreement" and a "securities contract" entitled to the financial contract safe harbor protections of sections 559 and 555 under the Bankruptcy Code. In so deciding, the Court found that the subordinated notes were "interests in mortgage loans." In addition, the Court ruled that the "commercial reasonableness" standard of Article 9 of the New York Uniform Commercial Code did not apply to the foreclosure and liquidation of the subordinated notes subject to the repurchase agreement. Am. Home Mortgage Inv. Corp. v. Lehman Bros. Inc., et al. (In re Am. Home Mortg. Holdings, Inc.), No. 07-11047, Adv. Proc. No. 07-51739, 2008 WL 2156323 (Bankr. D. Del. May 23, 2008).