Issue link: https://mbozikis.ufcontent.com/i/1422521
128 Additionally, as discussed above in Chapters V.C. and V.F., the bankruptcy estate benefits from the automatic stay of actions against the debtor or its property (including setoffs of prepetition debts), as well as certain avoidance provisions enabling the estate to avoid and recover prepetition preferences and fraudulent transfers. See 11 U.S.C. §§ 362, 547, 548. In the case of derivative contracts, such as forward contracts, swap agreements, securities and commodities contracts, repurchase agreements and master netting agreements relating thereto ("Safe Harbor Contracts"), Congress created exceptions to these general rules in order to minimize volatility in the financial markets. Since the value of a derivative contract fluctuates with the market, derivative counterparties are at a special disadvantage if they are not able to terminate their contracts upon their counterparty's bankruptcy, but instead must await the trustee's decision to assume or reject the contract. Moreover, counterparties would face the risk that the trustee could "cherrypick" among derivative transactions, treating each transaction under a master agreement as a separate executory contract, and assuming only those transactions that are "in the money" to the debtor, while rejecting those that are not. In light of these counterparty risks, and the larger systemic risk posed by a bankruptcy filing—that, due to the interconnectedness of the derivative markets, the bankruptcy of one derivatives market participant could cause a "ripple effect" or chain reaction of failures, threatening entire markets—Congress provided special protections to certain derivative counterparties. These special protections fall into three general categories. First, contractual ipso facto rights of protected counterparties that permit liquidation, termination or acceleration are enforceable with respect to Safe Harbor Contracts. See 11 U.S.C. §§ 555, 556, 559, 560, 561. Second, protected counterparties to Safe Harbor Contracts are exempted from certain of the automatic stay provisions governing setoff and application of collateral, see, e.g., proceeding, or the appointment of a trustee or receiver. See 11 U.S.C. § 365(e)(1) (discussed above in Chapter V.E.3.e.).