Hahn & Hessen LLP; New York
There currently exists a split as to whether goods delivered within 20 days of a filing that qualify as §503(b)(9) administrative expenses (“20-day claims” or “20-day goods”) may also serve as new value to defend a preference under § 547(c)(4). On Jan. 6, 2010, Hon. Marian Harrison held that a preference defendant was not precluded from asserting new value based on 20-day goods. [2] By contrast, on Dec. 1, 2010, Hon. Kevin R. Huennekens prohibited such dual use reasoning that the assertion of both claims constituted “double payment.” [3] This article sets forth the pertinent statutory provisions and summarizes the decisions in Commissary and Circuit City illustrating the conflict in law.
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by: Joseph A. Friedman
Kane Russell Coleman & Logan PC; Dallas
Stephen Thomas
Lain, Faulkner & Co., P.C.; Dallas
Because there can be at least a two-year lag between a bankruptcy filing and a preference demand made pursuant to 11 U.S.C. §547, a consistent, proactive approach to gathering defense data is critical. Modern legal practice requires a nonintuitive, technical and peculiarly factual approach to defending preferences and preserving the electronically stored information (ESI) relevant to defending preferences. The creditor will need to supply the facts upon which its defense is based. Thus, trade creditors must work with counsel to properly preserve ESI so it can be used to defend the preference.
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Since Hon. Frank Easterbrook’s decision in the Kmart bankruptcy, [1] scholars and attorneys have commented on the decision and voiced their opposition to critical vendor orders in bankruptcy proceedings, yet such orders are still prevalent in bankruptcy cases. There has been limited discussion as to risks to the trade creditor of accepting critical vendor status. While a trade creditor is unlikely to decline treatment under critical vendor orders, those that qualify should negotiate the terms to limit the impact it has on their rights.
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The Unsecured Trade Creditors Committee made a joint presentation with the Secured Credit Committee at the Winter Leadership Conference in December titled "Protecting What You Get While Keeping It 'Business as Usual' in the Wake of Marathon Petroleum Co. v. Cohen (In re Delco Oil Inc.)." The session presented the factual and procedural background of In re Delco Oil Inc. and discussed the 11th Circuit's opinion and also covered topics related to the case. The panel was moderated by Ailen W. Hollowell of the U.S. Bankruptcy Court (D. Ariz.) in Tucson. The panel also included Jacob A. Brown of Akerman Senterfitt in Jacksonville, Fla.; Tobey M. Daluz of Ballard Spahr LLP in Wilmington, Del.; and Joanne Fungaroli of CapitalSource Finance LLC in Chevy Chase, Md.
Protecting What You Get While Keeping It "Business as Usual" in the Wake of Marathon Petroleum Co. v. Cohen (In re Delco Oil Inc.)
ABI is pleased to announce the launch of the newly updated and enhanced ABI Journal Online. ABI Journal Online provides immediate access to the current issue of the ABI Journal as well as issues dating back to the year 2000. ABI members are able to search ABI Journal Online by year and issue, keyword, author and column. In addition, members can submit articles for publication. Use your ABIWorld login and password to access the site.
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