On from April 5, 2012 to May 8, 2012, AP Services, LLC, as trustee of the CRC Litigation Trust in the Chem Rx Corporation Bankruptcy, commenced Chapter 5 preferential and fraudulent transfer recovery litigation with the filing of 93 avoidance complaints (40 complaints include 547 preferential transfer counts and 53 include constructive fraudulent conveyance claims under Bankruptcy Code Section 548 and New York Debtor and Creditor Law Section 278) complaints in the District of Delaware.   Traditional trade creditors make up less than half of the defendants.  Religious and charitable organizations are the primary targets.

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Adversary Proceedings Overview

Lead Bankruptcy Case Name (Case Number): Chem Rx Corporation (10-11567)

Bankruptcy Court District (Division): District of Delaware

Petition Date: May 11, 2010

Associated Cases: CRC Parent Corporation f/k/a Chem Rx Corporation, B.J.K. Inc., CRC NJ, LLC f/k/a ChemRx New Jersey, LLC, CRC PA, LLC f/k/a ChemRx / Salerno's, LLC, CRC BR, LLC f/k/a ChemRx-Boca Raton, LLC and CRC CT, LLC f/k/a ChemRx Care, LLC

Plaintiff: AP Services, LLC, as trustee of the CRC Litigation Trust

Number of Proceedings: 93

When Filed: from April 5, 2012 to May 8, 2012

Adversary Proceeding Judge: U.S. Bankruptcy Judge Mary F. Walrath

Plaintiff's Counsel: Fox Rothschild LLP (Wilmington, Delaware) attorneys Jeffrey M. Schlerf, Carl D. Neff, L. John Bird

Avoidance Period: The complaint identifies the preference period as the period "[o]n or within 90 days before the Petition Date".

 

The Complaints:

The complaints come in two basic forms - those with preference claims against trade creditors and those with fraudulent conveyance claims against religious and charitable organizations.

In this mass campaign by a liquidating trust (and not a Chapter 7 trustee), the preference complaints fail to identify the antecedent debts with the specificity required by several Delaware Bankruptcy Court decisions. The fraudulent conveyance complaints also seem thin in pleading several elements of a constructive fraudulent conveyance claim under Section 548(a)(1)(B). However, given the unique list of defendants, it is difficult to predict if any motion practice will be generated.

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