Legal Question in Bankruptcy in New Jersey

prefrerential treatment - bankruptcy case

In our wholesale business, one of our retail customer filed Ch. 11 and left a chunk of unpaide balances. A year later, proceeded with Ch.7 Now the trustee who happens to be their lawyer is suing us for payments made by the debtor within 90-day prior to the Ch. 11 petition, on the basis of preferential treatment. Questions:

1. Does the 90-day Pre-Petition Transfers refer only to payments for transactions during that period, or does it include all payments even those delinquents for transactions which happened much earlier than the 90-day (eg.6 mo earlier)?

2. The lawsuit stated that the debtor was insolvent during that 90-day pre-petition period and claimed that we were treated preferrably over others. In fact, I knew that the debtor was still buying, paying and selling during that time. Who determine this debtor's state of insolvency? What are the rules to determine whether or not it was insolvent?

3. On the court letter, is the plaintiff not required to show a proof of their calculation for the stipulated amount? How can I demand the proof without having to go through the court?

4. What would be my best defense to nullify such frivolous claims and abuse of the system?

THANK YOU VERY MUCH


Asked on 4/23/08, 1:35 pm

1 Answer from Attorneys
Robert Davies The Davies Law Firm, P.A.

Re: prefrerential treatment - bankruptcy case

'Preferences' are one of the most unfair parts of bankruptcy law, especially for a small business who just sells goods in the ordinary course of business.

You really must get an attorney to advise and defend you.

The trustee is NOT simply entitled to get back all payments; there are many rules that apply to this situation, and you MAY not have to pay back all or part of the money.

Please call my office if you would like my assistance. I would be happy to speak to you on the telephone, but it will take more than just a brief telephone call to assist you with these issues.

My contact information can be obtained from the links below, just click on the Attorney Profile link. Let my secretary know you found me through LawGuru. This website, LawGuru, will NOT let me list my phone number in this response.

Disclaimer: Your question and any response does NOT create an attorney-client relationship between you and this law firm. You can not rely on the statements made by an attorney given over the internet. The response that you have received is based only on the small amount of information which you have provided. The exact facts of your situation, including facts which you have not mentioned in your question, may completely change the result for your situation.

Read more
Answered on 4/24/08, 12:53 pm


Related Questions & Answers

More Bankruptcy Law questions and answers in New Jersey