Favorable Dismissal Of Preference Action For No Payment In Pharmaceutical Chapter 7 Case

In a Chapter 7 adversary proceeding arising from a large pharmaceutical bankruptcy, the Trustee sought to recover alleged preferential transfers from our client, a long‑standing supplier of natural sweeteners used in the Debtor’s manufacturing operations. The complaint exposed our client to significant potential liability despite its ordinary, arm’s‑length commercial relationship with the debtor.

Our team conducted a targeted ordinary course of business analysis comparing the historical payment period to the 90‑day preference period. The analysis showed only a narrow variance in average payment timing between the two periods, supporting the ordinary course defense and undermining any narrative that the challenged payments were unusual or preferential.

We also demonstrated that, when properly calculated, our client continued to supply substantial post‑transfer goods, providing significant subsequent new value to the debtor’s estate. This ongoing value further reduced any alleged exposure and reinforced the commercial normalcy of the parties’ relationship.

In addition, we executed a focused discovery strategy that included carefully crafted requests for admission and other written discovery. The Trustee’s failure to timely respond resulted in deemed admissions, positioning our client to pursue summary judgment and a request for attorney’s fees based on the established record.

Faced with the strength of the ordinary course defense, substantial subsequent new value, and dispositive discovery admissions, the Trustee ultimately agreed to dismiss the adversary proceeding with no payment from our client. This outcome fully eliminated our client’s litigation risk while avoiding the cost and uncertainty of continued litigation.

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