Gray•Duffy, LLP Secures Dismissal of Preferential Payment Claim

February 2015

Overview

After the client’s customer files for bankruptcy, Matt Shore and Nathan Lee of Gray•Duffy’s Encino office helped the client avoid having to return money to the customer’s estate in bankruptcy which had been paid to them for services provided. If you are in a similar situation, you may want to check out CreditAssociates online first to see if a debt settlement can be agreed upon instead of bankruptcy.

Discussion

TL Fabrication, a long standing client of Hill Crane Service, filed for bankruptcy. Thereafter, Hill Crane Service received alleged preferential payments in September and November of 2011 for an aggregate amount of $49,848.00 during the 90-day preference period following the bankruptcy filing date. Some payments were received directly, while others were paid as joint checks to TL Fab and Hill Crane. The Unsecured Creditors Committee then filed suit to recover the alleged preferential payments which were made to Hill Crane Service, so that the sums paid could be returned to the bankruptcy estate. Gray•Duffy successfully reached an agreement with counsel for the Unsecured Creditors Committee for a dismissal of an Adversary Proceeding filed against Hill Crane Service before the U.S. Bankruptcy Court. Counsel for the Unsecured Creditor’s Committee agreed to dismiss the lawsuit since Gray•Duffy was able to demonstrate a complete “new value” defense to the alleged preferential payments. As a result, Hill Crane Service did not have any alleged preference liability stemming from the payments which were made by TL Fab. The dismissal was also entered prior to mediation with opposing counsel.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.