Dismissed For No Payment
October 26, 2017, Delaware – The defendant, our client, in this case, is a software and service provider. The debtor was an independent oil and gas company engaged in the acquisition, exploration, development, and production of onshore oil and natural gas in North America. Our client provided software maintenance services to the debtor under the annual service contract. The debtors made a post-petition payment of $31,908.80 to the defendant to renew the annual service contract. The Plaintiff initiated a preference action against our client to recover an amount of $31,908.80 as alleged preferences. We submitted our position statement to the Plaintiff, arguing that the alleged transfers were protected from avoidance because the service contract was assumed and approved by the court and was thus exempt from the ambit of the trustee’s avoidance powers under §549 of the Bankruptcy Code. Additionally, the transfer was not avoidable as the court authorized the parties’ post-petition transaction. We also claimed that the alleged transfer cannot be avoided because the transfer constituted a necessary expense to preserve the debtor’s estate and the Defendant had the right to receive it which is equal to an administrative claim, which the defendant is entitled to receive under §503 of the Bankruptcy Code. Based on our arguments, the trustee dismissed the case for no payment.