Opinion ID: 558109
Heading Depth: 2
Heading Rank: 2

Heading: Contemporaneousness in Fact

Text: 16 Section 547(c) also requires a transfer to be in fact a substantially contemporaneous exchange to constitute a non-avoidable preference. 11 U.S.C. Sec. 547(c)(1)(B) (1988). The transfer of the 425,000 Safeguard shares occurred within seven business days of SASI's purchases of $8 million worth of stock through Lewellyn's cash account. Under Regulation T, $3,225,000 of these purchases was to come due on March 4, 1982, $2,500,000 would come due on March 5, 8, and 9, and $2,225,000 would come due on March 10 and 11, 1982. This court previously has recognized the contemporaneous nature of securities transactions closed within the seven-day settlement period. See Naftalin & Co. v. Merrill Lynch, Pierce, Fenner & Smith, 469 F.2d 1166, 1179-80 (8th Cir.1972); see also 4 Collier on Bankruptcy p 764.01 n. 9 (15th ed. 1987) (quoting legislative history to the effect that settlement payments made to a securities clearing organization are non-avoidable preferences because they constitute contemporaneous exchanges for new value under Sec. 547(c)). 17 Courts also have looked to the agreement of the parties to determine whether an exchange is substantially contemporaneous in fact. See Remes v. Acme Carton Corp. (In re Fasano/Harriss Pie Co.), 43 B.R. 871, 876 (Bankr.W.D.Mich.1984), aff'd, 71 B.R. 287 (W.D.Mich.1987); Advance Glove, 42 B.R. at 493. The clearing agreement between SASI and Lewellyn incorporated Regulation T's seven-day settlement period for cash transactions, and the transfer of the 425,000 Safeguard shares did occur within seven business days of the $8 million in stock purchases. Under these circumstances, the bankruptcy court's finding that the exchange was substantially contemporaneous in fact is not clearly erroneous.