Introduction
On October 17, 2014, Charles M. Forman, the Chapter 7 Trustee (the "Trustee") for the bankruptcy estate of Satcon Technology Corp., began filing complaints to recover what he contends are avoidable preferences. The Trustee filed the preference actions in the Delaware Bankruptcy Court and argued 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 Satcon Technology Corp. bankruptcy proceeding, why the company filed for bankruptcy as well as key developments during the course of the bankruptcy proceeding. In October, 2012, Jason Cornell published a summary of the Satcon Technology Corporation bankruptcy filings in this post.
Background
On October 17, 2012, Satcon Technology Corporation and various of its subsidiaries (collectively, "Satcon") filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. As stated in its Declaration filed in support of its Chapter 11 petitions (the "Declaration" or "Decl."), Satcon attributes its bankruptcy, in part, to the elimination by European governments of solar power subsidies. In North America and Asia, Satcon has been forced to deal with greater competition and a drop in prices. Decl. at *3. Typical Satcon customers include developers of large-scale solar farms. Decl. at *7.
The Bankruptcy Proceeding
On February 7, 2013, just four months after filing for bankruptcy, Satcon's bankruptcy case converted to Chapter 7. As Satcon is a debtor under Chapter 7 of the Bankruptcy Code, the Trustee is responsible for administering the liquidation of Satcon's assets. Additionally, the Trustee is responsible for prosecuting litigation intended to increase the assets available to distributeto the company's creditors. This includes filing and prosecuting preference actions.
The Preference Actions
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 Satcon bankruptcy, as well as the preference actions, are before the Honorable Kevin Gross. The Trustee/Plaintiff prosecuting the NewPage preference actions is represented by the Cole, Schotz, Meisel, Forman & Leonard, P.A.
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."
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.