There currently exists a split as to whether goods delivered within 20 days of a filing that qualify as §503(b)(9) administrative expenses (“20-day claims” or “20-day goods”) may also serve as new value to defend a preference under § 547(c)(4). On Jan. 6, 2010, Hon.
Since Hon. Frank Easterbrook’s decision in the Kmart bankruptcy, [1] scholars and attorneys have commented on the decision and voiced their opposition to critical vendor orders in bankruptcy proceedings, yet such orders are still prevalent in bankruptcy cases.
Because there can be at least a two-year lag between a bankruptcy filing and a preference demand made pursuant to 11 U.S.C. §547, a consistent, proactive approach to gathering defense data is critical.
In bankruptcy cases, general unsecured claims can be found near the back of the line and are often paid pennies on the dollar.
Although a claim involving only goods sold to the debtor qualifies as an administrative expense under § 503(b)(9)[1] of the Bankruptcy Code, courts are split as to whether, and to what extent, this section covers so-called “hybrid” claims—those involving both goods and services transactions.
If your company is a member of the official committee of unsecured creditors (committee) and the bankruptcy your company is involved with is nearing the time of the confirmation of a liquidation plan, this article may be of interest to you. By now, you have gotten some idea of where the bankruptcy is heading.
In the wake of the global credit crisis, the U.S. housing market plummeted with values declining as much as 50 percent and home foreclosures at record highs. With lower asset values and frozen credit markets, it became difficult, if not impossible, for U.S. homebuilders to continue business operations. Many U.S.
![Photo of David B. Wheeler [1]](https://abi-org-corp.s3.amazonaws.com/committee/Authors/David-Wheeler.jpg)
The most accessible defense to a preference claim is the “new value” defense codified at 11 U.S.C. §547(c)(4). If the requirements of §547(c)(4) are met, this defense enables a creditor to avoid preference liability where it has already received a preferential transfer by subsequently providing new value to the debtor.
Creditor committees use valuation reports in a variety of ways, and it is important for the lawyer or financial advisor to help the committee understand how to read and evaluate a valuation report.
An emerging strategy many hedge and private equity funds are pursuing is known as the “loan-to-own” investment. In this type of investment, a fund’s investors acquire debt and sometimes certain amounts of equity or management control, such as voting power or board seats, from a lender of a distressed company.