Articles Written By: burbageweddell

Circuit City Liquidation – Preliminary Bankruptcy Preference Assessment

Date: January 31, 2009 Author: burbageweddell

On November 10, 2008, Circuit City Stores, Inc. (“Circuit City”) filed for reorganization relief under Chapter 11 of the United States Bankruptcy Code. Slightly more than two months later Circuit City announced abandonment of its plan to reorganize. Instead, Circuit City will liquidate all of its assets.

What does this liquidation of Circuit City mean in terms of the potential for bankruptcy preference claims?

We have looked at the financial and other public information available. Our preliminary assessment is that the Circuit City liquidation has the potential create a massive number of bankruptcy preference claims.

Sample Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. Section 503(b)(9)

Date: January 27, 2009 Author: burbageweddell

We have included a simple sample of Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. Section 503(b)(9). You can access this sample by clicking the preceding link.

We stress that this is a sample and a simple one at that. There are several ancillary provisions that could be included depending upon the circumstances of a particular case.

We provide an extensive discussion Section 503(b)(9) administrative expense request process in the article: Bankruptcy Creditor 503(b)(9) Administrative Expense

Suppliers Lining Up for 503(b)(9) Administrative Expense Claims

Date: January 13, 2009 Author: burbageweddell

11 USC Section 503(b)(9) provides that a supplier shall be entitled to an “administrative expense claim” for “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”

Clearly motivated by Cadence’s announcement that it is liquidating, suppliers are making sure that they are in line for allowance of administrative expense claims pursuant to

Bankruptcy Preference Subsequent New Value Defense

Date: January 11, 2009 Author: burbageweddell

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.

DESA LLC Bankruptcy Filing May Give International Spin to Bankruptcy Preference Claims

Date: January 7, 2009 Author: burbageweddell

DESA LLC filed for Chapter 11 Bankruptcy Protection on Decemter 29, 2009. DESA is leading manufacturer of heating products and power tools.

The bankruptcy is in its earliest stages. It has yet to been seen what reclaimation actions will be filed.

The list of DESA’s 35 largest unsecured claims, identifies companies in China(3), Hong Kong(2) and Taiwan. Three of the five top unsecured creditors are Asian.

Pike Family Nurseries Liquidation – Trustee Estimates Net Preference Claim Recoveries

Date: January 5, 2009 Author: burbageweddell

Trustee in Pike Family Nurseries Bankruptcy Liquidation Case Estimates Net Preference Claim Recoveries of $500,000 Will be Realized by 12/31/2009.

The case of:

In Re: Pike Nursery Holding LLC, d/b/a Pike Family Nurseries
d/b/a Pike Nurseries (“Pike”), Case No. 07-79129 in the United States Bankruptcy Court for the Northern District of Georgia

Cadence Innovation LLC – Decision to Liquidate Means Preference Claims are Coming

Date: December 30, 2008 Author: burbageweddell

Original Post 12/28/2008; See Updates At End of this Post

For a supplier confronted with a customer bankruptcy, nothing changes bad to worse like the failure of the customer to successfully reorganize. This means that a filing under Chapter 11, which creates the possibility that the customer will continue operations, now becomes a liquidation under Chapter 7. Worse still, the supplier who has received payments on open account during the bankruptcy preference period will likely face a bankruptcy preference claim and faces the real prospect of receiving a demand for repayment of those amounts.

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Articles Written By: burbageweddell

Circuit City Liquidation – Preliminary Bankruptcy Preference Assessment

Sample Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. Section 503(b)(9)

Suppliers Lining Up for 503(b)(9) Administrative Expense Claims

Bankruptcy Preference Subsequent New Value Defense

DESA LLC Bankruptcy Filing May Give International Spin to Bankruptcy Preference Claims

Pike Family Nurseries Liquidation – Trustee Estimates Net Preference Claim Recoveries

Cadence Innovation LLC – Decision to Liquidate Means Preference Claims are Coming