On August 7, 2018 (the "Petition Date"), Debtors commenced a voluntary case under Chapter 11 of the Bankruptcy Code.
On April 5, 2019, the Debtor’s Chapter 11 case was converted to a case under Chapter 7 of the Bankruptcy Code.
These adversary actions are before the Honorable Christopher S. Sontchi.
Background, as alleged by Plaintiff:
The Debtor was a retailer that offered for sale a variety of fine jewelry items in a
wide range of styles and prices, principally dealing with diamonds and gemstone jewelry. Around
the time of the Petition Date, the Debtor operated over 120 stores in 23 states across the United
States.Common Defenses in Preference ActionsThe United States Bankruptcy Code provides many affirmative defenses to preference actions, contained within Section 547(c). For example, the most common defenses that may be available to a Defendant under Section 547(c) may include:
• the transfer was a contemporaneous exchange for new value given to the debtor (i.e., the debtor received something of value in exchange for the transfer); 11 U.S.C. §547(c)(1);
• after such transfer, Defendant gave new value to or for the benefit of the debtor (i.e., the Defendant extended additional credit to the Debtor after receiving the transfer) 11 U.S.C. §547(c)(4); or
• the transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the recipient (i.e., Defendant made the transfer under ordinary business terms). 11 U.S.C. §547(c)(2).
For more information, see our page on Preference Defense Litigation:
http://www.tobialaw.com/delaware-preference-defense-lawyer.html