Fifth Circuit Holds Avoidance Actions Can Be Sold

Joining the Eighth and Ninth Circuit Courts of Appeals, the Fifth Circuit Court of Appeals recently held that a debtor or trustee can sell its avoidance actions to third-party, non-estate representatives.   See Briar Capital Working Fund Capital, L.L.C. v. Remmert (In re South Coast Supply Company), No. 22-20536 (5th Cir. Jan. 22, 2024) (Dennis, J).  […]

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Why Avoidance Actions Are Difficult to Dismiss by a Rule 12(b)(6) Motion

Traditional avoidance actions under the Bankruptcy Code, i.e., preferences and fraudulent transfers, have laudable goals: (a) to provide equal treatment to creditors of an insolvent company and (b) to claw back otherwise unavailable assets for the benefit of creditors.  It is no wonder then that the governing provisions of the Bankruptcy Code and applicable state […]

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Eleventh Circuit Holds that Paid “New Value” can Still Support a Preference Defense

Joining the Fourth, Fifth, Eighth and Ninth Circuit Courts of Appeal, the Eleventh Circuit recently held that new value does not need to remain unpaid in order to support the subsequent new value defense in a preference action. See Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC), Case No. 17-13588, 2018 WL […]

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Delaware Court Applies “Kiwi” Defense to Preferential Transfers

In In re NewPage Corporation, et al., Adversary Proceeding No. 13-52429 (Bankr. D. Del. Feb. 13, 2017), a Delaware Bankruptcy Court applied a unique defense to certain preferential transfers targeted by a liquidating trustee. The defense focuses on a commonly overlooked element of a preferential transfer, section 547(b)(5). Preference 101 Attempting to facilitate the principle […]

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