On September 7-8, 2016, various debtors in the ADI Liquidation, Inc. (f/k/a AWI Delaware, Inc.), et al. bankruptcy proceeding filed approximately 332 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 544 and/or 547, 548 and 550 of the Bankruptcy Code (depending upon the nature of the underlying transactions).  The Debtors also seek to disallow claims of such defendants under Sections 502(d) and (j) of the Bankruptcy Code.

Of the 332 avoidance actions, AW Liquidation, Inc. (f/k/a Associated Wholesalers, Inc.), filed approximately 294, WR Liquidation, Inc. (f/k/a White Rose Inc.) filed approximately 27 avoidance actions, and RT Liquidation Corp. (f/k/a Rose Trucking Corp.) filed 11 avoidance actions.

The ADI Liquidation Debtors filed voluntary petitions for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on September 9, 2014 under Chapter 11 of the Bankruptcy Code.   A hearing on the confirmation of the Debtors’ Second Amended Chapter 11 Plan of Liquidation is scheduled for September 30, 2016.

The various avoidance actions are pending before the Honorable Kevin J. Carey.  The pretrial conference has not yet been scheduled.

For preference defendants looking for an analysis of defenses that can be asserted in response to a preference complaint, below are several articles on this topic:

Preference Payments: Brief Analysis of Preference Actions and Common Defenses

Minimizing Preference Exposure: Require Prepayment for Goods or Services

Minimizing Preference Exposure (Part II) – Contemporaneous Exchanges

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

Introduction

On September 6th and 7th, 2016, Nathan A. Schultz, as Distribution Trustee of the TER Trust (the “Trustee”) for the bankruptcy estate of Trump Entertainment Resorts, Inc. (the “Debtors”), filed 92 complaints in preference action cases.  The Trustee filed these actions in the Delaware Bankruptcy Court and argued that the defendants hold assets belonging to the Debtor and that the payments received by various defendants are avoidable and subject to recovery under 11 U.S.C. §§ 547, 548, 549 and 550 of the United States Bankruptcy Code.  The Trustee is represented by the law firms ASK LLC and Gibbons, P.C.

Background

The Debtors owned and operated two casino hotels located in Atlantic City, New Jersey: the Trump Taj Mahal Casino Resort (the “Taj Mahal”) and the Trump Plaza Hotel (the “Plaza”).  On October 2, 2015, the Court entered an order confirming the Debtors’ Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code as Modified (the “Confirmation Order” and “Plan,” respectively). [D.I. 1123].  The effective date of the Plan (the “Effective Date”) occurred on February 26, 2016. [D.I. 1902]. In accordance with the Plan and Confirmation Order, the TER Trust (the “Trust”) was established effective on the Effective Date of the Plan, and the Debtors and the Trustee entered into that certain Distribution Trust Agreement.

Pursuant to the Distribution Trust Agreement, the Trustee was tasked with prosecuting avoidance actions, including preference and fraudulent transfer actions.  The Debtor’s bankruptcy, as well as the preference actions, are before the Honorable Kevin Gross.

Defenses to a Preference Action

Preference actions are a form of litigation specifically provided for by the Bankruptcy Code which are intended to recover payments made by the Debtor within the 90 days prior to declaring bankruptcy.  The presumption is that the Debtor knew it was going to file bankruptcy, so any payments it made during this 90-day window went to friends and people it wanted to keep happy, and stiffed those the Debtor’s management didn’t like.   Recognizing that these payments aren’t always made for inappropriate reasons, 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.”

John Bird is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  John is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach John at (302) 622-4263 or at jbird@foxrothschild.com.

On August 4, 2016, the Delaware Bankruptcy Court considered cross-motions for summary judgment in a preference action case styled as Pirinate Consulting Group, LLC v. Maryland Department of the Environment (In re NewPage Corp.), Adv. Pro. No. 13-52206 (KG).  This gem of an opinion is noteworthy in that it analyzes various defenses raised by a state agency to a preference complaint.

Background

Pirimate Consulting Group, LLC, as litigation trustee of the NP Creditor Litigation Trust (“Plaintiff” or “Litigation Trustee”) sought to avoid three separate payments as preferences under section 547(b) of the U.S. Bankruptcy Code (the “Code”) against Maryland Department of the Environment (“Defendant” or “MDE”).

The Debtors’ subsidiary, Luke Paper Company operates a mill (the “Luke Mill”) in Maryland that is regulated by various divisions of MDE.  Defendant asserted that “the State’s operating permit program has been in place for decades” and that the Debtors have “been paying the emissions based fee of the type at issue in this case . . . at least since 1997.”  Here, the Trustee seeks to avoid three separate fees paid to MDE.

Under Maryland law, all entities that operate “fuel-burning equipment, statutory combustion turbines, or . . . wood digesters” must obtain a permit.  Accordingly, the Debtors would remit an annual permit-to-operate fee (the “Permit Fee”) in order to maintain their license. The applicable Maryland statute provides that the fee is calculated based upon a “base fee of $200.00 plus an emission-based fee for each ton of regulated emissions from all installations at the plant or facility.”

On July 6, 2011, the Debtor paid the Permit Fee in the amount of $1,597,584 to MDE.  The Debtors have been paying the Permit Fee since at least 2007, and the amount of the fee has ranged from $328,047 to $1,597,584 in 2011.  In addition to the Permit Fee, the Debtors sought to avoid an asbestos license renewal fee in the amount of $750, and a reporting fee of $1,000 under the Federal Emergency Planning and Community Right to Know Act.

In defense, MDE cross-moved for summary judgment, arguing that the Asbestos Fee was not paid on account of an antecedent debt and that the transfers did not enable it to receive more than it would have in a hypothetical liquidation. Additionally, MDE asserts three affirmative defenses under section 547(c) of the Code – the contemporaneous exchange defense, the ordinary course of business defense, and the de minimis exception. Additionally, MDE argues that 28 U.S.C. § 959(b) prohibits a trustee from recovering environmental compliance fees.  Finally, MDE argues that the doctrine of sovereign immunity insulates it from liability in these proceedings.

Analysis

Asbestos Fee Not Recoverable

To start, Judge Gross found that the Asbestos was not made “on account of an antecedent debt.”  The Court explained that a transfer is deemed “on account of an antecedent debt” if the debtor incurs the liability prior to the alleged preferential transfer.” 11 U.S.C. § 547(b)(2); Stanziale v. S. Steel & Supply, L.L.C. (In re Conex Holdings, LLC), 518 B.R. 269, 277 (Bankr. D. Del. 2014). More specifically, courts have held that a debt “is deemed to have been incurred on the date upon which the debtor first becomes legally bound to pay.” Conex, 518 B.R. at 277.

The Court determined that the Debtors did not became legally bound to remit the Asbestos Fee before the Debtors’ payment of such fee.  In this regard, the Court observed that the Debtors had no obligation to renew the license before the expiration date.  The Court also found that MDE’s letter to the Debtors informing of the Debtors about the Asbestos Fee did not trigger an obligation for Debtors to make payment of that amount.  Notably, no services had been provided by MDE prior to submission of the letter.  Thus, the Court found that the Debtors’ payment was not on account of an antecedent debt, and thus not recoverable.

Transfers Protected by Ordinary Course of Business Defense

In analyzing the ordinary course of business defense under Section 547(c)(2), Judge Gross examined the following five factors: “(1) the length of time the parties engaged in the type of dealing at issue; (2) whether the subject transfers were in an amount more than usually paid; (3) whether the payments at issue were tendered in a manner different from previous payments; (4) whether there appears to have been an unusual action by the debtor or creditor to collect on or pay the debt; and (5) whether the creditor did anything to gain an advantage (such as additional security) in light of the debtor’s deteriorating financial condition.” Stanziale v. Indus. Specialists Inc. (In re Conex Holdings, LLC), 522 B.R. 480, 487 (Bankr. D. Del. 2014).

With respect to the first factor, the length of time the parties engaged in the type of dealing at issue, the record shows that MDE invoiced the Debtors for at least five (5) years prior to the Petition Date.  Thus the first factor weighed in favor of MDE.

Factor two, whether the subject transfers were in an amount more than usually paid, also weighs in favor MDE. The Asbestos Fee and the Report Fee were constant throughout the historical period – $750 and $1,000 respectively.  The Permit Fee varied considerably, but “[t]he record indicates that the formula for calculating the Permit Fee remained constant throughout the years,” which the Court concluded was the most relevant consideration with respect to this factor.

Factor three, whether the payments at issue were tendered in a different manner than the historical payments, weighed in favor of MDE as neither side has proffered any evidence to suggest payment had been made in a different manner.

Factor four, unusual actions by the debtor or creditor, also weighed in favor of MDE. There was no such evidence.  As to the fifth factor, there was no evidence that MDE attempted to exploit the Debtors’ distressed financial condition or rushed to collect its debt.  Thus, the Court found that the factors weighed in favor of MDE, and each of the transfers were shielded from recovery under the ordinary course of business defense.

Other Defenses

In addition, the Court found that the Asbestos Fee and Permit Fee were shielded by the contemporaneous exchange defense under Section 547(c)(1). Separately, the Court rejected MDE’s defense under 28 U.S.C. Section 959(b), along with MDE’s de minimis exception defense that each transfer should not be aggregated but determined separately whether they exceed the statutory floor of $5,000 under Section 547(c)(9).  Judge Gross noted the majority view that transfers should be aggregated, and there was no reason to depart from this rule especially because the Court separately found that each of the transfers were shielded from recovery under other defenses. Finally, the Court rejected MDE’s sovereign immunity defense, because the U.S. Supreme Court found that such defense is not a bar to preference actions against state agencies.  Cent. Va. Cmty. College v. Katz, 546 U.S. 356, 359 (2006).

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

On June 16, 2016, the Official Committee of Unsecured Creditors (the “Committee”) of Kid Brands Inc., et al. (the “Debtors”), filed approximately 64 complaints seeking the avoidance and recovery of allegedly preferential and fraudulent transfers under Sections 547, 548 and 550 of the Bankruptcy Code.  The Committee also seeks to disallow claims of such preference defendants under Sections 502(d) and (j) of the Bankruptcy Code.

The Debtors filed voluntary petitions for bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey on June 18, 2014 under Chapter 11 of the Bankruptcy Code.   On July 2, 2014, the Office of the United States Trustee for the District of New Jersey appointed the Committee.

The law firms of ASK LLP and Gellert Scali Busenkell & Brown, LLC represent the Committee in these various preference cases.  The pretrial conference has not yet been scheduled.

For preference defendants looking for an analysis of defenses that can be asserted in response to a preference complaint, below are several articles on this topic:

Preference Payments: Brief Analysis of Preference Actions and Common Defenses

Minimizing Preference Exposure: Require Prepayment for Goods or Services

Minimizing Preference Exposure (Part II) – Contemporaneous Exchanges

Carl D. Neff is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the recent decision of Gavin Salmonese, LLC v. Shyamsundar, et al. (In re AmCad Holdings, LLC, et al.) (Bankr. D. Del. June 14, 2016), Judge Walrath considered whether a liquidation trustee had standing to bring a claim for breach of fiduciary duty against the debtors’ former D&Os when the post-confirmation trust was the recipient of a wholesale assignment of causes of action, without specifying breach of fiduciary duty claims.

The answer is no.  The Court stated that “related to” jurisdiction post-confirmation is much more narrow and may only be exercised over matters which have a “close nexus to the bankruptcy plan or proceeding.” Binder v. Price Waterhouse & Co., LLP (In re Resorts Int’l, Inc.), 372 F.3d 154, 164–65 (3d Cir. 2004).  A chapter 11 plan that retains jurisdiction over a specific cause of action generally satisfies the close nexus requirement.  BWI Liquidating Corp. v. City of Rialto (In re BWI Liquidating Corp.), 437 B.R. 160, 166 (Bankr. D. Del. 2010).  However, a wholesale assignment of causes of action from the bankruptcy estate to a post-confirmation trust fails to establish a close nexus as to any specific cause of action. Insilco, 330 B.R. at 523-26.

Here, the Plan provides that the Court shall retain jurisdiction over “Causes of Action,” a term broadly defined to include:

all of the Debtors’ actions, causes of action, choses in action, liabilities, suits, debts, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, third-party claims, counterclaims, and crossclaims, whether known or unknown, reduced to judgment or not reduced to judgment, liquidated or unliquidated, contingent or non-contingent, matured or unmatured, disputed or undisputed, secured or unsecured, assertable directly or derivatively, existing or hereinafter arising, in law or equity or otherwise, based in whole or in part upon any act or omission or other event occurring prior to the Petition Date, or during the course of the Bankruptcy Cases, through, and including the Effective Date, including but not limited to, the Avoidance Actions and Trust Claims.

The Court found that nowhere in the definition of “Cause of Action” or elsewhere in the Plan are specific breach of fiduciary duty claims against the Officer Defendants or Manager Defendants (the named defendants) mentioned.  However, the Court provided that even if the “Cause of Action” definition encompasses those claims, a wholesale assignment of claims to a post-confirmation trust is insufficient to establish a close nexus with respect to any individual claim.  Thus, the Court found that the Trust lacked standing to bring breach of fiduciary duty claims against the D&Os.

Further, the Court dismissed the preference claims.  The Complaint only alleged that “numerous Managers of the Debtor caused [AmCad Holdings, LLC] to repay the loans that those Managers made to the company.” (Adv. D.I. 1 at 10.)  The Complaint fails to indicate the loan, the date or amount of each payment of the loans, or who was repaid.  However, alleged preferential transfers must be identified with particularity to ensure that the defendant receives sufficient notice of what transfer is sought to be avoided.  Thus, the Court dismissed the Trust’s avoidance actions, and the disallowance of claims under Section 550.

Carl D. Neff is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

Introduction

From May 11 through May 17, Alfred Giuliano, the Chapter 7 Trustee (the “Trustee”) for the bankruptcy estate of Leading Edge Logistics, LLC (the “Debtor”), filed approximately 86 complaints in preference action cases.  The Trustee filed these actions in the Delaware Bankruptcy Court and argued that the defendants hold assets belonging to the Debtor and that the payments received by various defendants are avoidable and subject to recovery under 11 U.S.C. § 547 of the United States Bankruptcy Code. This post will briefly cover the Debtor’s bankruptcy proceedings.  The Trustee is represented by the law firm Subranni Zauber LLC.

Background

The Debtor was a privately-held global logistics management company that provided truckload transportation, specialized heavy haul transportation, freight forwarding, international shipping, intermodal, air/ocean, contract carriage, and warehousing.  At the time of the bankruptcy filing, one of the principal assets of the Debtor was its accounts receivable, which it valued at approximately $14 million.

The Trustee obtained Court authority to run the Debtor’s business for a short time while he liquidated the accounts receivable in an effort to maximize the recovery for the creditors of the Debtor.  Having handled the liquidation of all the remaining assets of the Debtor, the Trustee is also tasked with prosecuting litigation intended to increase the assets available to distribute to the company’s creditors.  This includes filing and prosecuting preference actions.  The Debtor’s bankruptcy, as well as the preference actions, are before the Honorable Mary F. Walrath.

Defenses to a Preference Action

Preference actions are a form of litigation specifically provided for by the Bankruptcy Code which are intended to recover payments made by the Debtor within the 90 days prior to declaring bankruptcy.  The presumption is that the Debtor knew it was going to file bankruptcy, so any payments it made during this 90-day window went to friends and people it wanted to keep happy, and stiffed those the Debtor’s management didn’t like.   Recognizing that these payments aren’t always made for inappropriate reasons, 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.”

John Bird is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  John is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach John at (302) 622-4263 or at jbird@foxrothschild.com.

From May 11 to May 13, 2016, SRC Liquidation, LLC International Holdings, LLC (“Liquidating Debtor”), unleashed yet another wave of preference actions, filing approximately 257 additional complaints seeking the avoidance and recovery of allegedly preferential and fraudulent transfers under Sections 547 and 550 of the Bankruptcy Code.  The Liquidating Debtor also seeks to disallow claims of such preference defendants under Sections 502(d) and (j) of the Bankruptcy Code.

The second wave of preference action filings brings the total preference actions filed in the SRC Liquidation bankruptcy to 393 in total.  To review a prior post concerning the first wave of preference actions filed by the Liquidation Debtor, click here.  These avoidance actions are pending before the Honorable Brendan L. Shannon.

For preference defendants looking for an analysis of defenses that can be asserted in response to a preference complaint, below are several articles on this topic:

Preference Payments: Brief Analysis of Preference Actions and Common Defenses

Minimizing Preference Exposure: Require Prepayment for Goods or Services

Minimizing Preference Exposure (Part II) – Contemporaneous Exchanges

Carl D. Neff is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

On May 5, 2016, SRC Liquidation, LLC International Holdings, LLC (“Liquidating Debtor”), filed approximately 137 complaints seeking the avoidance and recovery of allegedly preferential and fraudulent transfers under Sections 547 and 550 of the Bankruptcy Code.  The Liquidating Debtor also seeks to disallow claims of such preference defendants under Sections 502(d) and (j) of the Bankruptcy Code.

SRC Liquidation, LLC (f/k/a SRC Liquidation Company f/k/a The Standard Register Company) and/or its related debtors (collectively, the “Debtors”) filed voluntary petitions for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on March 12, 2015 under Chapter 11 of the Bankruptcy Code.   On November 19, 2015, the Court entered an order confirming the Debtors’ Second Amended Chapter 11 Plan of Liquidation for SRC Liquidation Company and its Affiliates (the “Plan”).  The Plan became effective on December 18, 2015.

The law firms of ASK LLP and Bayard, P.A. represent the Liquidating Debtors in these various preference cases.  The pretrial conference has not yet been scheduled.

For preference defendants looking for an analysis of defenses that can be asserted in response to a preference complaint, attached is a reference guide prepared on the subject: “A Preference Reference: Common Issues that Arise in Delaware Preference Litigation.”

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272.

Because no recent opinions have been published by the Delaware Bankruptcy Court, I wanted to touch on a subject that is vital in nearly every preference or fraudulent transfer case:  The Statute of Limitations For A Preference Claim

A. Statute of Limitations

The debtor has two years from the date it filed its petition for bankruptcy to file a complaint seeking the recovery of a preference payment. However, if the court appoints a trustee, the limitations period for filing the lawsuit extends one year from the date the trustee was appointed.  Preference litigation cannot be commenced once the court closes or dismisses the debtor’s bankruptcy.

B. Service of the Summons and Complaint

The two-year time period, or statute of limitations, is not the only deadline governing the commencement of the preference action. The statute of limitations governs when the preference complaint must be filed with the court. The Federal Rules of Bankruptcy Procedure govern how long the plaintiff has to serve the complaint on the party receiving the payments (i.e. the defendant). Under the Federal Rules, the party filing the lawsuit must serve the defendant within 120 days.2

Note, however, that the party may request an extension of time in which to complete service. The party commencing the lawsuit can achieve service in a number of methods, including mailing the summons and complaint to the defendant by First Class mail.

Failing to file a complaint within the applicable statute of limitations is a sure-fire way for a party to lose its rights.  In any litigation, preference or otherwise, the first thing to check is whether a claim is time-barred.  We have published several posts concerning the statute of limitations:  Statute Of Limitations Posts.  If you would like additional information about the statute of limitations, or preference litigation generally, please take a look at our “Preference Reference” – available here.

John Bird practices with the law firm Fox Rothschild LLP in Wilmington, Delaware. You can reach John at 302-622-4263, or jbird@foxrothschild.com.

Summary

In yet another straight-forward 15 page decision signed April 18, 2016, Judge Walrath of the Delaware Bankruptcy Court granted a defendant’s motion to dismiss a preference complaint, but granted the plaintiff leave to amend. Judge Walrath’s opinion is available here (the “Opinion”).  Numerous posts on this blog discuss other opinions issued by the Delaware Bankruptcy Court dealing with preference payments, as can be seen here. PREFERENCE OPINION POSTS

Background

My colleague, Carl Neff, published a blog post when THQ first started filing preference actions.  You can read it here: THQ Inc. Preference Actions Filed

THQ was a publisher of video games, including such franchises as Saints Row and Darksiders.  Unfortunately for fans of those series, however, THQ was unable to keep pace with its secured debt.  After it failed to make a loan payment, it filed for bankruptcy.  Prior to bankruptcy, THQ had engaged the Starcom defendants to provide media and marketing services.  On December 19, 2014, THQ, Inc., the Plaintiff, filed its Complaint seeking recovery of certain transfers as preference and/or fraudulent transfers from the Starcom Defendants.  The Defendant filed its Motion to Dismiss and after a complete briefing, the Court issued the Opinion.  Opinion at *3.

The Opinion

The motion to dismiss was made pursuant to Rule 12(b)(6).  In Delaware the primary precedents for motions to dismiss are Iqbal, 129 S. Ct. 1937 (2009)  and Twombly, 550 U.S. 544 (2007), both of which are cited by the Opinion at *4.  The Third Circuit has expanded on these precedents in its opinion Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009).  The Third Circuit has articulated a two-part analysis to be applied in evaluating a complaint.  First, the court “must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions.”  Second, the court must determine “whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Opinion at *5 (quoting Fowler at 210-211).

The motion to dismiss argues that the Trustee failed to make any of the factual allegations required.  Judge Walrath  agreed “with the Movants that the Complaint does not adequately identify the transferors and the transferees, the nature of the antecedent debt, and the dates of the alleged transfers to the Additional Defendants. There are no specific allegations of what transfers were actually made to the Additional Defendants and by whom.”  Opinion at *8.

Judge Walrath then quickly granted the Motion to Dismiss and held that “the Plaintiff is not allowed to engage in discovery until it has properly pled its Complaint.”  Opinion at * 9.

My $.02

As was the case in prior opinions granting a motion to dismiss a preference complaint, the plaintiff’s request to allow an amended complaint to be filed was granted.  Considering that most of the plaintiffs handling preference litigation have filed hundreds of prior preference cases, I wonder if a time will come when the Court will begin to require mass-filing preference plaintiffs to pay the litigation costs of the defendants.

While this motion to dismiss may have only delayed the process, it succeeded in denying the Plaintiff an opportunity to go on a fishing expedition of discovery.  I don’t know whether this case will continue through to a trial or will be finalized through a settlement.  But I can say with certainty that for most preference litigants, most of the time, it makes financial sense to settle before incurring significant legal costs.  For a quick primer on preference litigation, please take a look at the Preference Reference which I co-authored.

John Bird practices with the law firm Fox Rothschild LLP in Wilmington, Delaware. You can reach John at 302-622-4263, or jbird@foxrothschild.com.