On on July 19, 2011, Alfred T. Giuliano, Chapter 7 Trustee in the Ultimate Acquisition Partners, LP Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 39 complaints in the District of Delaware.The debtors’ bankruptcy cases were filed on January 26, 2011 and Trustee Giuliano was appointed on May 4, 2011. This will be the first Delaware bankruptcy mass preference actions arising out of a case filed after the Delaware Bankruptcy Court made unequivocally clear that the days of “virtual, mail merge” preference complaints were over. Trustee Giuliano had the advantage of knowing the records he had to have and making sure that they were preserved.

These are not “plead thin and amend” complaints. Click here to see a sample complaint. These complaints include a heavy dose of relationship pleading and each transfer is identified by reference to the invoice it paid. However, given the care taken in the identification of antecedent debt, the question is “Why isn’t the debtor (there are two debtors) that made the transfer identified.” The complaints seem to provide a clue if not the explanation:

The Debtors operated specialty stores primarily in the mid-west and western United States. Of the 46 stores, 35 were operated by Ultimate Acquisition Partners, LP (“UAP”) and 11 were operated by CC Retail (“CC”). All operated under the name “Ultimate Electronics” (“Operating Name”). The Debtors maintained a single bank account, with Wells Fargo Bank, N.A., Account No. 4121902118 from which all payments were made, including the transfers at issue in this action. Each payment bore the Debtors’ Operating Name on its face. [Emphasis added]

Given the size of some of the preference claims this deficiency, however explained, is likely to be challenged.

Adversary Proceedings Overview

Lead Bankruptcy Case Name (Case Number): Ultimate Acquisition Partners, LP (11-10245)

Bankruptcy Court District (Division): District of Delaware

Petition Date: January 26, 2011

Associated Cases: The Associated Debtors are: Ultimate Acquisition Partners, LP and CC Retail, LLC

Plaintiff: Alfred T. Giuliano, Chapter 7 Trustee

Number of Proceedings: 56

When Filed: on December 12, 2012 (second round; first round from July 19, 2011 to July 21, 2011) bringing total to 128

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

Plaintiff's Counsel: Pachulski Stang Ziehl & Jones LLP (Wilmington, DE) through its attorney Bradford J. Sandler

Avoidance Period: The complaint identifies the preference period as the "the 90-day period prior to commencement of the Debtors’ bankruptcy cases".


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