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200 Avoidance Actions Filed in American Apparel Bankruptcy Cases

October 2, 2017, Delaware – Starting September 29, 2017, Peter Kravitz, the litigation trustee of the AAI Litigation Trust, filed 43 lawsuits (the 2015 adversary proceedings) under Sections 547 and 550 of the Bankruptcy Code in the 2015 American Apparel bankruptcy case. Starting October 2, 2017, in addition to the 2015 adversary proceedings, debtor APP Winddown, LLC (American Apparel) initiated 200 avoidance actions (the 2016 adversary proceedings) pursuant to Sections 547, 548, 549, and 550 of the Bankruptcy Code in the 2016 American Apparel bankruptcy case.

By way of background, the bankruptcy case started on October 5, 2015, when the 2015 debtors commenced the 2015 American Apparel Case by filing voluntary petitions in Delaware for relief under Chapter 11 of the Bankruptcy Code. On January 27, 2016, the court entered an order confirming the first amended joint plan of reorganization of the debtors and debtors in possession. The debtors ultimately failed and on November 14, 2016, the reorganized American Apparel re-filed, commencing the second case in Delaware under Chapter 11 of the Bankruptcy Code. Accordingly, there are two sets of avoidance actions currently being litigated before the United States Bankruptcy Court for the District of Delaware. The Trustee is seeking to avoid and clawback transfers made by the American Apparel debtors to various vendors, service providers, and other creditors that occurred during the 90-day period before the commencement of 2015 American Apparel Case. The preference period is defined in the complaint as the period between July 7, 2015, and October 5, 2015.

ASK LLP is prosecuting this preference action as counsel to the trustee Kravitz and the Debtors. The bankruptcy cases are In re APP Winddown, LLC (f/k/a American Apparel, LLC), et al., Bankr. Case No. 15-12055; In re APP Winddown, LLC (f/k/a American Apparel, LLC), et al., Bankr. Case No. 16-12551. Honorable Judge Brendan Linehan Shannon is presiding over the debtors’ bankruptcy cases.


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