Whether the extraterritorial application of the Bankruptcy Code's securities settlement 'safe harbor' provision under 11 U.S.C. §546(e) impermissibly bars foreign common-law claims brought by foreign liquidators seeking to recover fraudulently obtained investor proceeds

No question identified. : 2. Applicants Krys and Mitchell and their predecessors (together, the “Liquidators”) have spent the last 16 years working to recover assets for innocent investors in foreign-based funds who were left holding the bag after the collapse of the infamous Ponzi scheme orchestrated by Bernie Madoff. 3. Years before the Madoff scheme came to light in 2008, the Funds were formed under the law of the British Virgin Islands (“BVI”) to pool investor money and feed it into larger investment vehicles. The Funds entrusted the bulk of investors’ money to Bernard L. Madoff Investment Securities, which was supposedly a reputable firm with a demonstrated history of above-market returns. When the Madoff scheme collapsed, most investors discovered overnight that Madoff was not managing their retirement funds and other savings but recycling them as part of the Ponzi scheme. But some, typically large-scale and sophisticated investors, managed to cash out before the scheme imploded—and instead of losing their investments, they received outsized returns paid for by their fellow investors’ savings. 4. Because a large amount of the inflated returns—around $6 billion— went to investors who had consented to suit in New York, see Exhibit A at 5, 8, 1220, Applicants filed claims in federal bankruptcy court in New York, invoking Chapter 15 of the Bankruptcy Code and seeking relief under various BVI statutory and common-law causes of action. 5. Chapter 15 is designed just for such claims. Its stated purposes include providing assistance to foreign representatives of debtors, protecting and maximizing the value of the debtors’ assets, and promoting comity and respect for foreign law in USS. courts. 11 U.S.C. §§1501(a), 1507; see, e.g., In re Cozumel Caribe, S.A. de C.V., 482 B.R. 96, 113 (Bankr. S.D.N.Y. 2012). Unlike Chapters 7 and 11 of the Bankruptcy Code, which authorize domestic trustees to “avoid[]” only domestic transactions under USS. law, see In re Atlas Shipping A/S, 404 B.R. 726, 744 n.16 (Bankr. S.D.N.Y. 2009), Chapter 15 authorizes foreign representatives to bring avoidance claims in the United States that arise under foreign law and/or involve foreign transactions, In re Condor Ins. Ltd., 601 F.3d 319, 329 (5th Cir. 2010). 6. The bankruptcy court nevertheless dismissed all the Liquidators’ claims except for constructive trust claims against the few Defendants that allegedly knew of Madoff’s fraud when they redeemed their shares. See Exhibit A at 10-12. The district court affirmed, albeit on somewhat different grounds. See Exhibit A at 12. 7. The parties cross-appealed, and the Second Circuit ruled for Defendants, reversing the ruling that the Liquidators’ constructive trust claims could proceed and affirming the dismissal of all other claims. See Exhibit A at 4. As relevant here, the court held that the Bankruptcy Code’s “safe harbor” for securities settlement payments, 11 U.S.C. §546(e), applies extraterritorially. See Exhibit A at 23-33. The court proceeded to conclude that the safe harbor not only restricts statutory avoidance powers but also bars foreign common-law claims (when brought in U.S. courts pursuant to Chapter 15). See Exhibit A at 42-49. 8. Applicants filed a timely motion for rehearing en banc, which was denied on October 16, 2025. Exhibit B. 9. Applicants intend to file a petition for certiorari demonstrating that the panel erred in holding that §546(e)’s safe harbor applies extraterritorially. This Court has repeatedly held that federal statutes cover only domestic conduct unless “Congress has affirmatively and unmistakably instructed that’ the provision at issue should ‘apply to foreign conduct.” Abitron Austria GmbH v. Hetronic Int, Inc., 600 U.S. 412, 417-18 (2023) (quoting RJR Nabisco v. European Cmty., 579 U.S. 325, 335 (2016)). That basic principle should have controlled here, as the Bankruptcy Code contains no indication—let alone an affirmative and unmistakable one—that the “safe harbor,” whi