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Article List for for Bankruptcy Preferential Transfer Assessment, Defense

Three Questions that Give Practical Meaning to Fundamental Bankruptcy Preference Concepts

For businesses confronting of a bankruptcy avoidable transfer claim under Section 547 of the Bankruptcy Code, answering three questions provides a bridge between esoteric descriptions of bankruptcy preference law and real world bankruptcy preference defense.  A new article on this website entitled “A Three Question, Preliminary Self Assessment of a Bankruptcy Preference Claim” (click link to read) strives to give a bankruptcy preference defendant an look at the preference claim after it is filtered through three questions that each hit at core bankruptcy preference principles. »»» Read rest of article . . .

More articles on: " , ". First Published June 2nd, 2010.

A Bankruptcy Preference Adversary Proceeding Complaint – An Elemental Video Review – Part 1

The service of an adversary proceeding complaint often may provide the first notice to a business that it has been identified as a recipient of bankruptcy preferences. Without the warning of a demand letter, the complaint may seem like a missive from hell – laced with demands to avoid and recover preferential transfers and statutory citations to Sections 547(b), 550 and 502(d), the words have as much meaning to the uninitiated as hieroglyphics.

Cover page of part 1 of a video review of the elements of a bankruptcy preference complaint

Click on this image to go to PART 1.

Based upon our interactions with our clients, we realized that most recipients of bankruptcy preference complaints want to understand the complaint. After all, for defendant businesses, especially those in the mid market segment that we primarily serve, the complaint may represent a threat to health equivalent to going into the hospital for open heart surgery.

We have developed a 5 part video series with the uninspired, but accurate, title: “Video Review of the Elements of an Adversary Proceeding Complaint to Recover Bankruptcy Preferences.” In Part 1, which can be viewed by clicking the image to the right, we provide an introduction to adversary proceeding complaints, which discusses the unique nature of an adversary proceeding and provides an overview of the 5 elements of an adversary proceeding complaint.

More articles on: " , , ". First Published March 30th, 2010.

The Caption of the Adversary Proceeding Complaint – An Elemental Video Review – Part 2

The caption of an adversary proceeding complaint provides essential information for the defendant in the process of resolving an adversary proceeding complaint for the recovery of bankruptcy preferences and other avoidable transfers. Part 2 of our five part series on the elements of a bankruptcy preference complaint addresses the caption.

Cover page of part 2 of a video review of the elements of a bankruptcy preference complaint - this part addresses the caption

Click on this image to go to PART 2.

The caption to the complaint can be divided into five parts – the identification of the court, the title, the case and adversary proceeding numbers, the pleading designation and the local rule informational requirements. This installment in our video series addresses each of theses parts.

The objective of this part is to provide the viewer an basic understanding of the terminology of the caption, a grasp of the information provided by the caption and an appreciation for the importance of that information, especially in the process of identifying bankruptcy preference defense counsel.

More articles on: " , ". First Published April 5th, 2010.

Ordinary Course of Business Bankruptcy Preference Defense

The ordinary course of business defense requires that either (1) the payment have been made in the ordinary course of business of both the supplier and the customer; OR (2) the payment was made under “ordinary business terms.” Please note this is an either/or test. Prior to 2006 the test was an “AND” test and both elements had to be proven. This was very difficult to do. »»» Read rest of article . . .

More articles on: " , ". First Published January 11th, 2009.

Documentation Makes Contemporaneous Exchange Preference Defense a Winner

The contemporaneous exchange defense is one of the most often disputed defenses. It should not be that way. The focus of the defense is very narrow. The focus is on the time when the potential preference payment was received. The payment must be made at or about the same time as the delivery of goods or services for which payment is made. So the “information zone” is very short.

The reason the contemporaneous exchange defense is often litigated is because the supplier has failed to get the proper documentation in place to establish the defense. »»» Read rest of article . . .

More articles on: " , ". First Published January 11th, 2009.

Multiple Payments – Multiple Bankruptcy Preference Defenses – Mixing and Matching

One of the most critical but often overlooked opportunities to defend bankruptcy preference claims regards the ability to apply multiple defenses when there have been multiple payments. This ability to mix and match defenses means that the supplier’s exposure to bankruptcy preference claims can be reduced. »»» Read rest of article . . .

More articles on: " , ". First Published January 11th, 2009.

Section 365 Bankruptcy Preference Defense – Overlooked, Underutilized

Feb. 19, 2009 – In an article entitled Section 365 Executory Contract Assumption Defense to a Bankruptcy Preference Claim, we discuss the absolute defense to a preference claim created when a bankrupt company or its trustee “assumes” an “executory contract”.  That defense was firmly established in a 2003 decision by the Third Circuit Court of Appeals in the bankruptcy case of In re Kiwi International Air Lines Inc., so the defense is sometimes called the Kiwi defense.

The Kiwi defense is a defense that we believe may be underutilized.  As we explain elsewhere on this web site, the facts needed to establish the 3 most common defenses are “fixed” at the time of the bankruptcy filing.  As to establishing the subsequent new value, ordinary course of business and contemporaneous exchange defenses, there is nothing that the supplier can do but pull together books and records. »»» Read rest of article . . .

More articles on: " , , , ". First Published February 19th, 2009.

Bankruptcy Preference Subsequent New Value Defense

The subsequent new value defense is perhaps the most frequently-used defense. It is, from a books and records perspective, the easiest defense to prove. The focus is on the period after the potentially preferential payment.

We have posted a brief video in which we review the “subsequent new value” defense.

  • The “Zone of Information” that applies to this defense
  • The basic elements of the defense
  • A simple example of the application of the defense

Click this link to see the video Bankruptcy Preferences – Subsequent New Value Defense. »»» Read rest of article . . .

More articles on: " , , ". First Published January 11th, 2009.

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