Header graphic for print
Delaware Bankruptcy Litigation Information on Corporate Bankruptcy Proceedings in Delaware and Throughout the United States

Preference Complaints Filed in the Velocity Express Bankruptcy

Posted in Preference Litigation

Earlier this month, James Carroll in his capacity as the "Wind Down Professional" for the Velocity Express bankruptcy, began filing preference actions against various defendants.  As alleged in the preference complaints, Carroll was appointed as Velocity’s Wind Down Professional under a "Wind Down Order" entered by the Delaware Bankruptcy Court in July of last year.  At the time it filed for bankruptcy, Velocity was a package delivery (aka "logistics") provider whose services included customer bulk shipments, pick-up and delivery services as well as "expedited point to point services."  Decl. at *3. 

Velocity began its business as United Shipping & Technology.  In 1999, United acquired Corporate Express Delivery Systems.  Since reorganizing in 2002, United has operated as Velocity Express.  On September 24, 2009, Velocity filed petitions for bankruptcy with the Delaware Bankruptcy Court.  At the time of filing for bankruptcy, the company employed over 1,300 employees and had contracts with approximately 2,400 drivers.  Decl. at *5. 

Velocity attributes its need to file for bankruptcy to the downturn in the U.S. economy.  Many of Velocity’s customers cut back on their shipping expenses as their sales declined.  As Velocity lost revenue, it was unable to cut certain expenses.  Commercial leases were just one of the fixed costs that Velocity contends forced it in to bankruptcy.  Decl. at *8.  To address the costs associated with leases, Velocity filed a motion with the Bankruptcy Court authorizing it to reject certain leases.  Velocity filed the lease rejection motion simultaneous with filing its petitions for bankruptcy.  Decl. at *16.

On September 24, 2009, Comvest Velocity Acquisition LLC entered into an asset purchase agreement with Velocity.  Comvest Velocity Acquisition LLC is an affiliate of Convest Investment Partners III, L.P.  The Bankruptcy Court approved the sale to Comvest on November 3, 2009. 

The Velocity Express bankruptcy, as well as the preference actions, are before the Honorable Mary F. Walrath.  Judge Walrath previously served as the Chief Judge of the Delaware Bankruptcy Court.  James Carroll, as the Plaintiff in the Velocity Express preference actions, is represented by the law firm Sullivan Hazeltine Allinson, LLC. 

For readers interested in more information concerning preference litigation, below are some prior posts I have written on the subject:  

Decision in Archway Cookies Grants Summary Judgment Based on Ordinary Course of Business Defense

Using the Solvency Defense in a Preference Action: In re Bernard Technologies

Recent Decision in Pillowtex Addresses Elements of the Ordinary Course of Business Defense in a Preference Action

Defending Avoidance Actions: The "Settlement Payment" Safe Harbor Receives Broad Interpretation Under In re Elrod Holdings

****************************************************************************

Jason Cornell is an attorney with the law firm Fox Rothschild LLP and practices before the United States Bankruptcy Court for the District of Delaware.  You can reach Jason at 302 427-5512 or jcornell@foxrothschild.com.