Resolving a split of circuits, the Supreme Court ruled unanimously yesterday in Merit Management Group LP v. FTI Consulting Inc. that the so-called safe harbor under Section 546(e) only applies to “the transfer that the trustee seeks to avoid,” according to a special analysis from ABI's Bill Rochelle. In other words, using a bank as an escrow agent does not preclude a trustee from recovering a constructively fraudulent transfer under Section 548(a)(1)(B), when the trustee is seeking to recover from the ultimate recipient of the transfer but not from an intermediary bank. The Supreme Court had been asked to resolve a split of circuits and decide whether the safe harbor applies when a financial institution is only a “mere conduit.” Instead, the unanimous opinion by Justice Sonia Sotomayor decided the case on a different and broader ground. The opinion may lead to a rethinking of safe harbor cases and might open the door to suits that previously were believed to rest comfortably within the safe harbor.