Between February 13 and February 18, 2020, NSC LIQUIDATING TRUST filed approximately 71 complaints seeking to avoid and recover certain alleged preferential and/or fraudulent transfers pursuant to Sections 547, 548 and 550 of the United States Bankruptcy Code. UPDATE: In October 2020, a second round of filings took place. Approximately 62 additional complaints were filed between October 14 and October 19, 2020.
The Trust seeks to avoid and recover from Defendants all preferential transfers of property that occurred during the ninety (90) day period prior to the commencement of the bankruptcy proceedings of the Debtors. The Trust also seeks to avoid and recover transfers to the extent such transfers were not made on account of antecedent debt, was a prepayment for goods and/or services subsequently received, or was a transfer made by NSC without a corresponding transfer into the payment account by NSC incurring the debt, Plaintiff pleads in the alternative that the Debtor(s) making such transfer(s) did not receive reasonably equivalent value in exchange for such transfer(s
The Debtors in these cases are: NSC Wholesale Holdings LLC; National Wholesale Liquidators of Lodi, Inc.; NSC Realty Holdings LLC; NSC of West Hempstead, LLC; Top Key LLC; BP Liquor LLC; and Teara LLC.
On October 24, 2018, each of the Debtors commenced voluntary cases under Chapter 11 of the Bankruptcy Code.
These cases are Jointly Administered.
These adversary actions are before the Honorable Christopher S. Sontchi.
Background, as alleged by Plaintiff:
As of the Petition Date, the Debtors owned and operated eleven (11) general merchandise close-out stores in four (4) states, Massachusetts, New Jersey, New York and Pennsylvania, trading under the name "National Wholesale Liquidators." The Debtors employed a unique hybrid merchandising strategy that was premised upon both continuity and close-out products. The Debtors offered customers both an everyday selection of first quality, brand name merchandise and opportunistic and varying special buys.
Common Defenses in Preference Actions
The 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
If you conducted business with National Wholesale Liquidators or any of the named debtors, especially if you have received a demand letter or a
email us at email@example.com or call the firm’s Wilmington offices directly at (302) 655-5303 to schedule a free initial consultation. We can discuss the situation and share with you our initial observations at no charge.