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Showing posts in Avoidance & Turnover

What Does It Mean to “Recover” Property (or the Value Thereof) for the Benefit of the Estate?

In re Allen, No. 13-3543, 2014 WL 4783085 (3d Cir. Sept. 26, 2014)

The Third Circuit was recently given the opportunity to explore what is required for “recovery” of property for the benefit of an estate under section 550 of the Bankruptcy Code.  In its own Florida bankruptcy proceeding, Advanced Telecommunication Network (“ATN”) avoided a transfer to Daniel W. Allen, Sr. (“Allen”), one of its former owners, and obtained a recovery order pursuant to section 550.  ATN pursued collection in the Florida courts but Allen actively impeded ATN’s efforts by transferring funds to trust accounts located in the Cook… Read More

Transferee’s Knowledge of Debtor’s Intent Not Relevant For Fraudulent Transfer Claim For Actual Intent To Defraud

SB Liquidation Trust v. Preferred Bank (In re Syntax-Brillian Corp.), Nos. 13-1373, 13-1959, 2014 WL 3893292 (3d Cir. Aug. 11, 2014)

In these consolidated appeals stemming from a 2011 Bankruptcy Court decision, the Third Circuit vacated the Bankruptcy Court’s dismissal of certain fraudulent transfer claims against appellee Preferred Bank because the debtor’s intent determines whether a fraudulent transfer claim may be maintained, not the transferee-defendant’s knowledge of the debtor’s intent.  However, the Court affirmed the Bankruptcy Court’s dismissal of all other claims.

The Third Circuit and Bankruptcy Court Opinions detail an alleged fraudulent scheme by certain… Read More

A New Look at Section 547(c)(4): Is “Paid Subsequent New Value” Non-Exclusive of Other Defenses?

Miller v. JNJ Logistics LLC (In re Proliance Int’l, Inc.), No. 11-52514 (CSS), 2014 WL 3956485 (Bankr. D. Del. Aug 14, 2014)

Following precedent, Judge Christopher S. Sontchi held in this Opinion that “paid subsequent new value” (“Paid SNV”) may offset a creditor’s preference exposure under section 547(c)(4) of the Bankruptcy Code.  However, in a potentially significant departure from the Court’s earlier decision in Pillowtex, Judge Sontchi ruled that, as long a trustee states a prima facie claim for an “otherwise avoidable” transfer under section 547(b),  the amount of a creditor’s Paid SNV defense may… Read More

Lengthy Service Oversight Causes the Bankruptcy Court to Dismiss Preference Claims

Forman v. Mentor Graphics Corp. (In re Worldspace, Inc.), Adv. No. 10-53286 (PJW), (Bankr. D. Del. June 5, 2014)

On June 5, 2014, Judge Walsh granted a motion to dismiss filed by a preference defendant, holding that the amended complaint which added the defendant to the proceeding could not relate back to the date of the original complaint under Federal Rule of Civil Procedure 15(c)(1)(C) so as to avoid the expiration of the applicable statute of limitations.  In rendering his decision, Judge Walsh found significant the plaintiff’s failure to properly serve the original defendant with five… Read More

Unconscionability Claim Dismissed; Fraudulent Transfer Claim Survives

Ritz Camera & Image, L.L.C. v. Canon U.S.A., Inc. (In re Ritz Camera & Image, L.L.C.), Adv. No. 12-50986 (KG) (Bankr. D. Del. Feb. 4, 2014)

This Memorandum Opinion opines on a routine motion to dismiss federal bankruptcy and state law claims asserted by a chapter 7 trustee against defendant Canon U.S.A., Inc. (“Canon“).  The adversary proceeding was commenced by the trustee following the 2012 filing and conversion of the chapter 11 proceedings commenced by electronics and camera merchandisers, Ritz Camera Centers and its affiliated debtors.  In connection with the debtors’ first… Read More

The Court Adopts The “Receipt Date” For New Value Defense

Giuliano v. Innovative Nationwide Builders, Inc. (In re Ultimate Acquisition Partners LLP), Adv. No. 11-52633 (MFW) (Bankr. D. Del. Jan. 31, 2014)

In this Memorandum Opinion, the Honorable Mary F. Walrath denied the motion for summary judgment of defendant Innovative Nationwide Builders, Inc. filed in response to the Trustee’s preference complaint because material issues of fact existed as to the defenses it asserted.  Although denial of summary judgment on preference claims is routine, in rendering its decision, the Court in Innovativeopined on an unsettled issue within the Third Circuit – namely, how… Read More

Release Provision Interpretation Aggregates Claims in Preference Action

U.S. Bank N.A. v. DHL Global Forwarding (In re Evergreen Solar, Inc.), Adv. No. 13-50486 (MFW), 2014 WL 300965 (Bankr. D. Del. Jan. 28, 2014)

In this short Memorandum Opinion, the Honorable Mary F. Walrath denied the defendant’s motion for summary judgment over preference claims.  In so holding, the Court interpreted a release provision in a settlement agreement to allow the plaintiff to aggregate alleged preferential transfers and only release them, pursuant to the agreement, if the combined amount totaled less than $60,000.

The release provision provided that “all claims for the avoidance… Read More