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The Bankruptcy StrategistLJN NewslettersNewsSections

Heightened Pleading Standards Apply to Avoidance Complaints

By Paul Rubin and John August
October 26, 2009

Parties to preference and fraudulent transfer actions should pay careful attention to the decision in Angell, Trustee v. Ber Care, Inc. f/k/a PPS, Inc., et al. (In re Caremerica, Inc.), 409 B.R. 737 (Bankr. E.D.N.C. 2009). There, relying upon the new standard for assessing the sufficiency of a complaint set forth by the Supreme Court in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), Bankruptcy Judge J. Rich Leonard dismissed certain avoidance claims and upheld others asserted by a Chapter 7 trustee. Caremerica provides useful guidance on whether particular elements of a preference or fraudulent transfer claim have been adequately pled.

Twombly, Iqbal and the Rule 8(a)(2) Pleading Standards

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