On October 28, 2014, The Official Committee of Unsecured Creditors of Q v. AB Foods LLC (the “Committee”), the committee in the Quantum Foods, LLC bankruptcy, began filing complaints to recover what it contends are avoidable preferences.  The Committee filed the preference actions in the Delaware Bankruptcy Court and argue that the transfers, or payments, received by various defendants are avoidable and subject to recovery under 11 U.S.C. § 547 and 548 of the United States Bankruptcy Code. This post will look at the Quantum Foods, LLC bankruptcy proceeding, why the company filed for bankruptcy as well as key developments during the course of the bankruptcy proceeding.


On February 18, 2014, Quantum Foods LLC (“Quantum” or “Debtor”), along with various related entities, filed chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware.  The main Quantum Bankruptcy case is Case Number 14-10318-KJC.  As stated in its Declarations in Support of Chapter 11 Petitions and First Day Relief (the “Declaration” or “Decl.”), Quantum described itself as a “leading further-processor of proteins, including beef, pork and poultry.”  Going into bankruptcy, the Debtors employed approximately 1,100 employees, all based in the Debtors’ facilities in Bolingbrook, Illinois.  The Debtors primary objective in commencing its chapter 11 cases was to pursue a prompt sale of their assets in order to maximize value for stakeholders, preserving jobs, minimizing supply disruptions for the Debtors’ customers and ensuring an uninterrupted supply chain for the Debtors’ vendors.  Decl. at * 2.

The Bankruptcy Proceeding

On multiple dates since the bankruptcy petition was filed, including May 16, 2014, June 13, 2014, July 11, 2014, and July 15, 2014 the Debtors file motions for the sale of assets.  These sales have disposed of a majority of the Debtors’ assets.

On July 14, 2014, the Court entered an order authorizing the Committee to prosecute causes of action on behalf of the Debtors and granting the Committee standing to pursue such claims. The causes of action include all litigation pursuant to Section 5 of the Bankruptcy Code.  This includes the recently filed preference actions.

The Preference Actions

The Quantum bankruptcy, as well as the preference actions, are before the Honorable Kevin J. Carey.  The Committee prosecuting the Quantum preference actions is represented by the Cross and Simon, LLC.

Defenses to a Preference Action

The Bankruptcy Code provides creditors with many defenses to preference actions. Included among these are the “ordinary course of business defense” and the “new value defense.” For reader’s looking for more information concerning claims and defenses in preference litigation, attached is a booklet I prepared on the subject: “A Preference Reference: Common Issues that Arise in Delaware Preference Litigation.”