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Home Case Studies J&A’s affirmative defenses to Trustee’s clawback claims lead to a dismissal with no payment

J&A’s affirmative defenses to Trustee’s clawback claims lead to a dismissal with no payment

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Debtors were a leading food and beverage company. Our client, the Defendant, is a Miami-based company that provided consulting and advisory services to the Debtors.

After the Debtors’ bankruptcy, the Trustee commenced a clawback action against the Defendant to avoid and recover $392,492.00 as alleged preferential and fraudulent payments.

Based on our analysis, we showed that Debtors made the transfers in question within the historical range of payments. In addition, the overall average lateness of these transfers was fairly similar to the overall average lateness of historical payments. We also showed that Debtors tendered these transfers in the manner and form not different from payments they made historically. Thus, the transfers in question are made in the ordinary course of business between the parties.

We also proved that after receipt of the first alleged preferential transfer, Defendant provided new value to the Debtors in the total amount of $455,695.00 in the form of its services. Out of this amount, Defendant should be permitted to set off at least $354,943.00 from the alleged transfers, leaving a net claim of $38,549 only.

Finally, we showed that the transfers alleged as fraudulent transfers were all made in consideration of the services Defendant provided to the Debtors and in exchange for reasonably equivalent value.

Based on the strength of our defenses, Plaintiff agreed to dismiss the case for no payment.

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Jones & Associates

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