On February 3, 2011, Alfred T. Giuliano, Chapter 7 Trustee of Carolina Fluid Handling Intermediate Holding Corp. (f/k/a Fluid Routing Solutions Intermediate Holding Corp.) in the Fluid Routing Solutions Intermediate Holding Corp Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 98 complaints in the United States Bankruptcy Court for the District of Delaware.
Mass Bankruptcy Preference, Avoidance Actions, Adversary Proceedings
Recent bankruptcy preference actions and adversary proceedings illustrating treatment of most aspects of bankruptcy preference assessment, negotiation and defense, including issues of timing and strategy.
Insync Marketing Solutions, LLC Bankruptcy Trustee Starts Preference Recoveries
On February 23, 2011, Sam S Leslie, Chapter 7 Trustee in the Insync Marketing Solutions, LLC Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 24 complaints in the United States Bankruptcy Court for the Central District Of California (Los Angeles).
Right Start (Babystyle) Creditor Trust Starts Bankruptcy Preference Adversary Proceedings
On February 1, 2011, Sltn Trst, LLC, solely in its capacity as Creditor Trustee of the (1) Babystyle Creditor Trust; and (2) Right Start Creditor Trust in the Right Start Acquisition Company and Babystyle, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 48 complaints in the United States Bankruptcy Court for the Central District Of California (San Fernando Valley).
Liquidating Trustee of the BearingPoint, Inc. Finishes Filings with Two Large Ones
On February 14, 2011, John DeGroote Services, LLC, in its capacity as Liquidating Trustee of the BearingPoint, Inc. Liquidating Trust finished up its bankruptcy preference complaints with a $21 million avoidance complaint against American Express Travel Related Services Company and a $10 million avoidance complaint against Ernst & Young, LLP.
Metaldyne Corporation (n/k/a Oldco M Corporation) Distribution Trustee Prepares Massive Bankruptcy Preference Recovery Campaign
The trustee of the distribution trust for Metaldyne Corporation n/k/a Oldco M Corporation (Bankruptcy Court Southern District of New York) has sent out over 500 demand letters for recovery of bankruptcy preferences. With the statute of limitations for bringing of preference actions expiring on May 27, 2011, the negotiation stage of the claim resolution process will be intensifying. The trustee, Executive Sounding Board Associates Inc. (the “Trustee”) has reported that, as of mid January, the Trustee had collected over $391,000 in preference recoveries and reduced the unsecured creditor class by over $1.38 million. Duane Morris LLP (New York, New York) has been retained to prosecute avoidance actions. Larry J. Kotler is lead attorney for Duane Morris in the bankruptcy preference recovery campaign. Pryor Cashman, LLP has been retained to prosecute avoidance actions as to which Duane Morris has a conflict.
S&K Famous Brands, Inc. Liquidating Trust Starts Bankruptcy Preference Adversary Proceedings
On February 2, 2011, S&K Famous Brands, Inc. Liquidating Trust in the S&K Famous Brands, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 25 as of February 2, 2011 complaints in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond).
Chapter 7 Trustee for the estate of WL Homes, LLC. Starts Bankruptcy Preference Litigation
On January 31, 2011, George L. Miller, Chapter 7, Trustee for the estate of WL Homes, LLC., et al. in the WL Homes LLC Bankruptcy, commenced his bankruptcy preference recovery litigation with the filing of 94 preference complaints. The Trustee has taken care to plead the elements of his bankruptcy preference claim in accord with the hightened pleading standards of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). In particular, the Trustee includes specific factual allegations supporting its claims of the Debtors’ insolvency during the preference period.
Noble International Ltd Liquidating Trustee Files Expansive Avoidance Actions Against Suppliers under Section 547, 548, 549 and 553
From January 19, 2011 through January 25, 2011, the liquidating trustee for Noble International Ltd. and 14 affiliates (the “Noble International”) filed 173 avoidance actions under Chapter 5 of the Bankruptcy Code in the Bankruptcy Court for the Eastern District of Michigan (Detroit Division). The filing of bankruptcy preference actions is no surprise (see our January 9, 2010 report of 2009 Automotive Supplier Bankruptcies). As part of its Plan of Liquidation, Noble International had estimated recovery of $3.85 million through avoidance actions. The complaints, however, are remarkable.
Lyondell Chemical Company Litigation Trust Starts Bankruptcy Preference Recoveries
The Lyondell Chemical Company and its 93 associated debtors’ (the “Debtors”) bankruptcy preference claims were transferred to the LB Litigation Trust when the LyondellBasell Third Amended and Restated Joint Chapter 11 Plan of Reorganization became effective on April 30, 2010. The plaintiff in the actions is Edward S. Weisfelner, as Trustee of the trust. Although starting slowly with the filing of only 39 preference actions from December 7, 2010 to December 17, 2010, the LB Litigation trust has the strong potential to launch a massive preferential transfer recovery effort.
PPI Holdings, Inc. (MPI International) Mass Bankruptcy Preference Recovery Filings Signal Start of Tsunami of Preference Actions in Automotive Supply Sector
On December 9 and 10 , 2010, the Official Committee of Unsecured Creditors of PPI Holdings, Inc. and 7 associated debtors (the “Debtors”) started its bankruptcy preference recovery efforts with by filing 182 complaints. The PPI Holdings preference actions are the leading edge of a tsunami of avoidable transfer recovery actions that are going to hit the automotive sector as the legacy from the Section 363 sales that dominated the sector bankruptcies in 2009.