Legal Question in Bankruptcy in California

Preferential payments

My customer filed Chapter 11 bancruptcy in Feb.of 2001 then changed to Chapter 7 in 2001. Under the ''preferential payments'' clause, I have been asked to return funds paid by check in Dec. of 2000. Is there any way to avoid this? (The payment was within the three month period).


Asked on 12/12/04, 3:12 pm

1 Answer from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Preferential payments

There are two main defenses to preferential payments: 1. If the payments were made in the ordinary course of the business (meaning, you made similar or the same types of payments, in the same time period after invoice, for months and years with this same debtor and the industry standard for such payments is the same); or 2. If you provided "new value" to the debtor AFTER the payment(s) in question. Meaning that you shipped more goods or provided services of a value sufficient to offset the preferential payment(s). If the bankruptcy case was filed in the Los Angeles or Orange County area and you would like to discuss your options further, please give me a call. Regards,

Mark

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Answered on 12/12/04, 3:21 pm


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