On February 6, 2015, Charles A. Stanziale, Jr., as the Chapter 7 Trustee (the "Trustee") of CPI, Corp., et al. ("CPI" or the "Debtors"), filed approximately 44 preference complaints seeking to avoid and recover alleged preferential transfers pursuant to Sections 547 and 550 of the Bankruptcy Code, to disallow claims pursuant to Section 502(d), for attorneys' fees, and prejudgment interest.
Background
By way of background, CPI filed petitions for bankruptcy in the District of Delaware on May 1, 2013 under Chapter 7 of the Bankruptcy Code. CPI was an operator of more than 2,000 U.S. portrait studios in locations such as Wal-Mart and Sears stores. CPI was forced to liquidate its assets after receiving a fourth forbearance agreement from its lenders.
McCarter & English, LLP represent the Trustee in these various preference cases. The pretrial conference has not been scheduled. These adversary actions, as well as the Debtors' bankruptcy proceeding, are before the Honorable Brendan Shannon.
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 that we prepared on the subject: " A Preference Reference: Common Issues that Arise in Delaware Preference Litigation."
In addition, 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
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
