Imagine you are an equipment manufacturer. You sell $45 million in goods to a reliable customer on credit, shipping them to a third-party warehouse to be held for the customer to pick up when needed.
Seller Beware: Recovering the Value of Preferential Transfers of Goods or Equipment
Imagine you are an equipment manufacturer. You sell $45 million in goods to a reliable customer on credit, shipping them to a third-party warehouse to be held for the customer to pick up when needed. Months later, unable to pay and sliding toward bankruptcy, the customer returns the unused equipment. The next thing you know, the customer, having filed for bankruptcy, sues you to recover not only the $45 million value of the returned equipment, but also an additional $55 million in cash payments the customer had made.That is exactly the situation Nortel Networks Inc. ('Nortel') recently faced ... Part One of this article discusses some of the many novel legal issues relating to prepetition equipment returns that arose in the Nortel case.
By
Norman N. Kinel And Timothy A. SolomonThis premium content is locked for The Bankruptcy Strategist subscribers only
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