In an article published in the 2017 April issue of The Journal of Bankruptcy Law, Jonathan Sykes and Correy Karbiener provide insight on whether § 546 (e) of the Bankruptcy Code protects transfers made to repay commercial mortgaged-back securities loans (CMBS loans). In determining which transfers are protected from a trustee's avoidance

powers under § 546(e), a majority of circuit courts have taken a broad approach, while the U.S. Courts of Appeals for the Seventh and Eleventh Circuits have taken a more narrow approach, Sykes and Karbiener explain. After the loans are transferred to the trust, certificates are sold entitling the holders to payments from principal and interest on the large pool of mortgages, this type of securitization is typically memorialized in a pooling and servicing agreement (PSA). Under the typical PSA, the securitized trust or trustee holds legal title and beneficial interest in payments made on account of the mortgage loans pooled and serviced under the PSA, in addition to and on behalf of the certificate holders; therefore, the securitized trust under the PSA, and not the master servicer, may be the actual "transferee" that acquires the beneficial interest.

Download the article,"Payments on Commercial Mortgage-Backed Securities Loans Cannot Be Avoided in Bankruptcy."