Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

BankruptcyThe Bankruptcy StrategistFeatures

Three Things Trustees Should Know About Affirmative Defenses in Preference Litigation

By Brad Jones
January 01, 2025

Preference recoveries brought under Section 547 of the Bankruptcy Code are one of the main litigation tools that bankruptcy trustees, debtors-in-possession and liquidating trustees can use to bring additional funds into a bankruptcy estate. A preference action allows for the recovery of payments made by a debtor to a creditor shortly before bankruptcy that provided the creditor an advantage over other, similarly situated creditors.

Through the Small Business Reorganization Act of 2019 (SBRA), Congress made preference litigation more difficult by amending 11 U.S.C. §547(b) to impose a new due diligence requirement on plaintiffs bringing preference litigation. The SBRA added the following language to 11 U.S.C. §547(b):

the trustee may, based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses under subsection (c), avoid any transfer of an interest of the debtor in property—

11 U.S.C. §547(b) (emphasis added).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

Warehouse Liability: Know Before You Stow! Image

As consumers continue to shift purchasing and consumption habits in the aftermath of the pandemic, manufacturers are increasingly reliant on third-party logistics and warehousing to ensure their products timely reach the market.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?