District of Delaware Bankruptcy Judge Mary F. Walrath denies motion of Citibank National Association (“Citibank”) to dismiss the bankruptcy preference avoidance complaint for failure to state a claim for relief. In her March 26, 2012 opinion, Judge Walrath holds that Citibank failed to establish that the transfers sought to be avoided were “settlement payments” protected by section 546(e). Distinguishing the recent decision in Official Comm. of Unsecured Creditors of Quebecor World (USA) Inc. v. Am. United Life Ins. Co. (In re Quebecor), 453 B.R. 201 (Bankr. S.D.N.Y. 2011), Judge Walrath finds that the transfers were to “collateralize Citibank’s exposure under a [letter of credit]” issued to secure payment of industrial revenue bonds. Although the transfers to Citibank were used to retire these industrial revenue bonds, the transfers to Citibank were not solely for the purpose of completing a securities transaction but also had the purpose of fulfilling an “obligation independent from any securities transaction”.
Articles tagged with: Qimonda Richmond LLC
Qimonda Richmond, LLC Bankruptcy: Qimonda Richmond, LLC v. Citibank Memorandum of Law in Support of Motion to Dismiss
08/03/2011 – Memorandum of Law in Support of Motion to Dismiss filed in the Qimonda Richmond, LLC Adversary Proceedings by Citibank, National Association et al before U.S. Bankruptcy Judge Mary F. Walrath in the District of Delaware filed by Morris, Nichols, Arsht & Tunnell LLP (Wilmington, DE) attorneys Gregory W. Werkheiser and Andrew R. Remming; and Milbank, Tweed, Hadley & McCloy LLP (New York, NY) attorneys Scott A. Edelman and Sander Bak .
Citibank, National Association seeks dismissal of a complaint for recovery of an allegedly preferential and fraudulent transfer of approximately $34 million. Citibank makes arguments based on Citibank’s status as a secured creditor, the presence of “reasonably equivalent” value; and its exercise of a right of setoff, but the first and primary argument is based on the Section 546(e) safe harbor.
Qimonda Richmond, LLC and Qimonda North America Corp. Start Bankruptcy Preference Adversary Proceedings
Between February 11 and February 17, 2011, Qimonda Richmond, LLC and Qimonda North America Corp., debtors in possession, filed 32 Chapter 5 preferential transfer complaints in the United States Bankruptcy Court for the District of Delaware.