The demise of Hard Rock Theme Park in Myrtle Beach, S.C. was a stunning disappointment. After two years of construction and a lavish opening in June, 2008, the $400 million entertainment complex – boasting the ability to entertain 30,000 visitors a day — closed its doors and opted for bankruptcy court less than four months later. In re HRP Myrtle Beach Holdings, LLC, Administratively Consolidated in Case No. 08-12193 in the United States Bankruptcy Court for the District of Delaware.
Between March 31 and April 2, 2010 (one day before the expiration of the statute of limitations), the Plan Administrator in the OTC International, LTD. nka IBP Corp. bankruptcy (Southern District of New York – Petition 08-11181) filed 78 adversary proceedings seeking recovery of alleged preferential transfers totaling more than $8.5 million. No less than 34 avoidable transfer recoveries are being sought from foreign suppliers – 24 located in Italy and 10 spread among Hong Kong, India, Germany, Thailand and Tunisia. Adversary proceedings to recover avoidable preferences against foreign suppliers are not unusual. However, these preference actions are worthy of note because of concentration of overseas defendants, both in terms of number of defendants and the relative size of the preference claims against them. To see an APScan of the 78 adversary proceedings, click this link.
The service of an adversary proceeding complaint often may provide the first notice to a business that it has been identified as a recipient of bankruptcy preferences. Without the warning of a demand letter, the complaint may seem like a missive from hell – laced with demands to avoid and recover preferential transfers and statutory citations to Sections 547(b), 550 and 502(d), the words have as much meaning to the uninitiated as hieroglyphics.
Cadence Innovation LLC (the “Debtor”) is continuing to try and settle potential bankruptcy preference claims against vendors who received payments from the Debtor during the ninety (90) day period prior to the petition pate (the “Transfers). On August 28, 2009, the Debtor filed a motion for approval of its second round of bankruptcy avoidance action settlements. This round, like the first round discussed in an earlier post, demonstrates that the Debtor continues to attribute value to the 503(b)(9) administrative expense claims as well as the general unsecured claims. However, unlike the first round, several vendors in this round of settlements are making payments to the Debtors to settle the avoidance claims. Some of these payments are substantial.
In what has aready been a very active case for Adversary Proceedings for recovery of bankruptcy preferences, the plan trustee for 99 Cent Stuff, Inc. filed 13 more banrkuptcy preference actions this week, including 7 today.