Opinion ID: 3064802
Heading Depth: 4
Heading Rank: 1

Heading: The “Triggering Event” Under Article X Has

Text: Occurred Centre contends that when it paid $110 million in settlement of the Commissioner’s preference action against it, SNIG’s obligations as guarantor were restored in that amount. Centre does not seek to revive the entire amount of the original guaranty. Article X of the PCSA requires a court finding or judgment that the payments made under the PCSA were preferential before Centre could exercise the remedies available to it under that section.7 Article X states that if any court 7 As the bankruptcy court stated in its Memorandum of Opinion, Centre is not attempting to revoke the Release or declare it null and void under IN THE MATTER OF SNTL 7451 of competent jurisdiction asserting jurisdiction over the subject matter of or the parties to the PCSA8 “enters a final order, judgment, or other finding that . . . a payment under the PCSA] . . . constitutes a voidable or preferential transfer, . . . an improper or disproportionate payment . . . or is otherwise in violation of law or subject to a claim or preference,” Centre may declare the PCSA null and void or exercise “any other remedy provided by law, equity, statute or contract[.]” PCSA, Article X (emphasis added). According to Trustee, Centre has not obtained such a court finding or judgment, and thus Centre cannot overcome the release of SNIG. We disagree. The state court order approving the settlement agreement between the Commissioner and Centre satisfies Article X’s requirement for a court order or finding. Paragraph F of the order indicated that the Commissioner was attempting to avoid the transfers and the order provided that the settlement agreement was “fully and finally approved.” The settlement agreement which was fully approved specifically stated that the payments by Centre to the Commissioner “are payments on account of the claims of the Liquidator [Commissioner] arising from payments asserted to be preferential transfers.” The state court order thus constituted an order or finding that the PCSA payment was subject to a preference claim. As a consequence, Article X and its remedies govern and supersede the release provisions of Article III.9 subsections (a)-(d) of Article X. Rather, it is invoking its other remedies provided by law or equity which become available under Article X upon entry of a court order or finding that the Payment was subject to a preference claim. 8 Neither party disputes that the state court had jurisdiction as contemplated by Article X. 9 As acknowledged by Centre in its opening brief, the primary obligors and SNIG “as guarantor” were “released from liability for up to $180 million” when the $163.4 payment was made to Centre under the PCSA. Appellant’s Opening Brief at 13. Despite this admission, Centre notes on page 17 of its Opening Brief that the Release did not mention SNIG as 7452 IN THE MATTER OF SNTL That order acknowledges that the Payment was subject to the Commissioner’s preference claim. Therefore, Centre is entitled to invoke those remedies available to it under Article X.