preference action


Recently, over 180 adversary actions were filed in the MPC Computers bankruptcy.  The adversary actions fall generally in to two categories – preference actions filed by MPC’s Committee of Unsecured Creditors and breach of contract actions filed by MPC.  This post will look briefly at why MPC filed for bankruptcy and discuss what may

Earlier this month Alfred T. Giuliano, the Chapter 7 Trustee for National Wholesale Liquidators, began filing various complaints seeking the avoidance and recovery of alleged preferential transfers.  On November 19, 2008, I wrote on this blog about the commencement of the National Wholesale Liquidators (“NWL”) bankruptcy (read my prior post concerning NWL here).  As

Linens N Things recently filed over twenty preference complaints.  As stated in the complaints,  Linens seeks the avoidance and recovery of alleged preferential transfers pursuant to 11 U.S.C. section 547 of the Bankruptcy Code.  According to a summons, a pretrial conference is scheduled on June 12, 2009.

The Linens bankruptcy proceeding is before the Honorable


Two weeks ago,  preference actions were commenced against a long list of defendants in the New Century Mortgage (“New Century”) and Tweeter Home Entertainment (“Tweeter”) bankruptcies.  The plaintiff in the New Century preference actions is Alan M. Jacobs, the liquidating trustee authorized under New Century’s Second Amended Plan of Liquidation to commence and prosecute


In January, Mortgage Lenders Network commenced over 65 adversary actions against various defendants, seeking the avoidance and recovery of preferential transfers (read one of the preference complaints here).  As reflected in its complaints,  Mortgage Lenders filed a chapter 11 bankruptcy petition in the Delaware Bankruptcy Court on February 5, 2007. During the ten years prior to its bankruptcy, Mortgage Lenders grew from a small mortgage company with seven employees, to a residential mortgage provider serving 47 states with over 1,700 employees. 

Given the commencement of Mortgage Lenders’ preference program, this post provides a brief summary of the elements and common defenses to preference claims.

Elements to a Preference Claim

In order to establish that a party received a preferential transfer, the plaintiff must prove that payments were received by a creditor on account of an “antecedent debt.” Further, the preferential payments must be made (i.) while the debtor was “insolvent”, (ii.) made within 90 days before the debtor filed for bankruptcy, and (iii.) the payments provide the creditor with more payments than it would receive if the debtor had liquidated under a chapter 7 liquidation.

Continue Reading Mortgage Lenders Network Files Preference Actions