Have you been on the receiving end of a preference action this past year? More than one? You’re not alone.
According to CFO.com, “Bankruptcy trustees are aggressively seeking to reclaim payments made by insolvent firms to vendors and other unsecured creditors.” The article notes that though the number of large corporate bankruptcy filings has dwindled in 2010, the rise in corporate bankruptcies over the last few years has led to a new wave of preference actions.
Why the delayed reaction? Because there’s a 2-year statute of limitations on preference actions. So cases filed in the last two years are starting to mail out their preference actions now. Case in point: The Quebecor World company just filed 1,700 preference actions according to the article. And General Motors is looming in the distance.
Who tends to get hurt the most by preference actions? Small businesses that aren’t as experienced in fighting preference actions.
What’s the best defense against preference actions? There are several legal defenses (e.g., “Ordinary Course of Business” and “New Value”). But practically speaking, the best defense is to be consistent with your customers and keep them on a regular payment schedule. This makes it easier to defend any preference actions filed against you.
What should I do if I receive a preference action? Contact an experienced bankruptcy lawyer.
As a New York bankruptcy lawyer who has extensive experience working on both the defense side as well as the trustee side of New York preference actions, I know the lay of the land, I can answer your questions and help you figure out the best and most cost-effective strategy for defending yourself.
Contact Bruce Weiner, Esq.
EMAIL Bruce Weiner
Phone
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
Fax (718) 625-1966
Go to bankruptcy Attorney Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.