Insolvency and Restructuring Update
American Home Mortgage

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In an important recent decision, the Bankruptcy Court for the District of Delaware held that a repurchase agreement involving mortgage loans is subject to the safe harbors of sections 362(b)(7), 555 and 559 of the Bankruptcy Code, and is therefore not subject to the automatic stay. Notably, the Bankruptcy Court held that the nature and scope of the Court's inquiry is limited to whether the agreement in question falls under the definition of repurchase agreement under section 101(47), and should not expand to encompass further analysis of the substance of the agreement or parol evidence.

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