Nortel Networks (CALA) Inc. and certain of its affiliated debtors, as debtors in possession, have commenced filing of adversary proceeding complaints for recovery of preferential transfers under section 547 of the Bankruptcy Code (bankruptcy preferences). On October 4, 2010, the initial round of 23 complaints were filed. A summary of the bankruptcy preference recovery actions is provided below.
Articles tagged with: Adversary Proceedings
Quebecor World Litigation Trust Requests Entry of Defaults in 269 (15%) of the Bankruptcy Preference Actions
On September 13, 2010, Eugene I. Davis, as Litigation Trustee for the Quebecor World Litigation Trust, filed affidavits and requests for entry of defaults in 269 bankruptcy preference actions. According to the affidavits, the defendants in these adversary proceedings simply failed to answer. This note briefly discusses the number of defaulting defendants, the size of the defaulted claim amounts and the impact of Section 502(d), which will preclude distributions on the prepetition unsecured claims of each of the defaulting defendant until the judgment is paid.
DPH Holdings Corp. (fka Delphi Corporation) Moves to Amend 130 Bankruptcy Preference Actions – Does the Presumption of Insolvency Trump Ashcroft v. Iqbal’s Mandate for Pleading Facts from which Insolvency Can be Found? Does Delphi Have the Insolvency Facts to Plead?
On July 22, 2010, Southern District of New York Bankruptcy Judge Robert Drain gave counsel for the Delphi reorganized debtors (the “Debtors”) an ultimatum – convince him that the debtors should be allowed to amend 130 preference-action complaints or those complaints will be dismissed on Rule 12(b)(6) grounds. The ”new” complaints, offered up on September 7, 2010, rely on factually threadbare conclusory statements of Delphi’s insolvency during the preference period. The Debtors’ collective prayer for relief can be paraphrased as: “Please let the Section 547(f) presumption of insolvency suffice for pleading factual grounds for insolvency!”
Ply-Marts: The Not-Good, the Bad and the Ugly Sides of Involuntary Bankruptcy
The 2008 Ply-Marts’ bankruptcy case (ND Ga. Case #08-72687) provides a poster-child picture of how trade creditors can lose when an involuntary bankruptcy petition is filed against a financially-strapped customer. In addition to the recovery of pre-petition preferential transfers under Section 547 of the Bankruptcy Code, many of the 45 adversary proceedings filed by the Chapter 7 trustee between August 16 and August 30, 2010, are introducing the defendants to the rights of a trustee to seek recovery under Section 549 on account of payments made to a creditor after an involuntary petition is filed and before the bankruptcy judge orders the commencement of the bankruptcy.
Chapter 7 Trustee’s Ply-Marts Preference Claims Illustrate Some “Preference Claim Timing Facts Of Life”
On August 16, 2010, the Chapter 7 bankruptcy trustee for Ply-Marts, Inc. (Northern District of Georgia Bankruptcy Case No. 08-72687) sued twenty creditors of the defunct lumber and building materials retailer, which did business as “Ply-Mart” and “PlyMart” (the “Debtor”). The trustee, Tamara Miles Ogier of the Atlanta firm of Ellenberg, Ogier, Rothschild & Rosenfeld, is seeking to avoid and recover preferential transfers made by the Debtor within the 90-day preference period.
Lessons of an Economic Analysis of the 204 Intermet Bankruptcy Preference Adversary Proceedings
Over a 3 day period, August 9th, 10th and 11th, 2010, the trustee of the liquidating trust for Intermet Corporation and its 19 co-debtors (the “Debtors”), filed 204 (almost immediately reduced by 3 to 201[fn1]) bankruptcy preference actions. The adversary proceedings are pending before Judge Kevin Gross. An analysis of the complaints shows:
Ascendia Brands, Inc. Poised to Launch Mass Bankruptcy Preference Actions
Ascendia Brands, Inc. (Delaware Bankruptcy Lead Case No. 08-11787) is poised to launch a barrage of bankruptcy avoidable, preferential transfer adversary proceedings within the next 2 weeks. Our analysis of the Debtor’s schedules indicates that approximately 140 former suppliers and other trade creditors will be targeted for avoidable transfer recovery under section 547, and there is a maximum theoretical recovery of approximately $21 million.
Delaware Bankruptcy Court Confirms Applicability of Section 1409(b) Venue Dollar Threshold to Claims for Recovery of Avoidable Preferential Transfers under Section 547
The Bankruptcy Court for the District of Delaware, Judge Kevin Gross, has confirmed the applicability to preference actions of the venue dollar threshold of 28 USC Section 1409(b). Dynamerica Mfg. LLC v. Johnson Oil Co., LLC, 2010 WL 1930269 (Bkrtcy.D.Del., May 10, 2010).
PBGC Claims Provoke Crucible Materials Corporation’s Creditors’ Committee Head Start on Bankruptcy Preference Claims – Prior to Plan Confirmation
The Official Committee of Unsecured Creditors appointed in the Crucible Materials Corporation bankruptcy (District of Delaware Case No. 09-11582 (MFW)) filed a motion on June 3, 2010 seeking intermediate derivative standing to pursue avoidance actions aka bankruptcy preference recovery. The Committee acknowledges that avoidance actions are supposed to be handled by a Litigation Trustee
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.