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Defenses to Preference Actions – Part 1

In previous posts on this site (What is a Preference?  And why should you care? and Preference Actions:  How to Defend Against Them), I’ve addressed the topic of preference actions (also commonly referred to as preference lawsuits).

If you read those two posts, then you know that, from a creditor’s perspective:

  1. Preference actions seem unfair at first, but they’re fully legitimate under the bankruptcy laws and they’re a reality that you have to deal with; and
  2. There are things you can do in preparation for defending yourself, and they require a fair amount of effort and thought.

However, you can take some comfort in knowing that there are some very legitimate defenses to preference actions against you.  The three most common defenses are:

  1. “Ordinary Course of Business” Defense
  2. Contemporaneous Exchange Exception
  3. New Value Defense

If you’re faced with a preference action, you don’t have to know all the legal nitty gritty or all the case law.  (That’s my job.)  But you may find it helpful to be aware that these defenses exist and also be familiar with the basic concept of each defense so you can gauge whether you think you have a case worth fighting.

We’ll cover each of these defenses in ensuing posts on this blog.

In the meantime, if you’re facing a preference action or preference lawsuit by a trustee in New York, please feel free to contact me for a free initial consultation.  I’ll be happy to answer all of your questions about bankruptcy, trustees and of course preference actions and help you figure out the best strategy for protecting your assets.

Go to Bankruptcy Attorney Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

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