Chief Judge Ferguson Denies Defendant’s Motion to Dismiss in TransVantage Solutions, Inc.
Giuliano v. Delta Air Lines, Inc. (In re TransVantage Sols., Inc.), Nos. 13-19753, 15-1882, 2016 Bankr. LEXIS 3672 (U.S. Bankr. D.N.J. Oct. 6, 2016)
The TransVantage cases were initiated under Chapter 7 of the Bankruptcy Code on May 3, 2013, following which Alfred Giuliano was appointed Chapter 7 Trustee for the Debtor TransVantage Sols, Inc. Two years later, the Trustee filed hundreds of preference and fraudulent transfer complaints against various defendants. Debtors were in the business of providing freight audit and payment services on behalf of its customers to facilitate accurate and timely review and payment of freight invoices. The Defendants argued that the Trustee failed to sufficiently plead the predicate elements of §547(b) of the Bankruptcy Code and urged the Court to dismiss the complaint. The Court concluded that the preference elements were sufficiently pled to survive dismissal. Further, an ordinary course of business defense under §547(c)(2) as raised by one of the Defendants was questioned both on procedural and substantive grounds by the Court. The Court held that the payments were neither made in the ordinary course of business nor made according to ordinary business terms. The Debtor used funds advanced by one customer to pay another customer’s freight bills, and this method was not consistent with the ordinary business terms under §547(c)(2) because ordinarily, funds paid by customers were held particularly to pay the freight bills of that and only that customer.
A Trustee is Not Barred to Bring an Action to Recover Fraudulent Transfers Even When Debtor Agreed to Dismiss the Litigation Under a Settlement Agreement.
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