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Bankruptcy Litigation

Payment Under Critical Vendor Order Does Not Bar Pursuing a Preference Claim

A supplier’s receipt of payment under a critical vendor order does not bar the debtor or trustee from pursuing a preference claim to recover amounts paid prepetition to the vendor, according to a recent ruling from the U.S. Bankruptcy Court for the District of Delaware.

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As a general rule, the Bankruptcy Code provides that prepetition trade creditors receive distribution on their claims, if any, in a Chapter 11 case only in connection with a Chapter 11 plan.

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