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Home Case Studies Trustee dismisses clawback claims after J&A proves that transfers were identical to pre-preference transfers

Trustee dismisses clawback claims after J&A proves that transfers were identical to pre-preference transfers

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The Debtors manufactured, marketed, and distributed a wide variety of branded and private label dairy and dairy case products across the United States. The Defendant is a Tennessee-based company that provided transportation services between the Debtors’ production, cold storage, and distribution centers.

Upon Debtor’s bankruptcy, the Trustee brought clawback claims against the Defendant for alleged preferential and fraudulent transfers of $190,527.74.

J&A compared the transfers in question with the transfers made historically between the parties and argued that the transfers in question were all made within the range of payments made historically, with a mere difference of one day in the overall payment averages. For example, if historically, Debtors made 94% payments in the range of 11 days to 17 days, all transfers in the preference period fell within this range.

For argument’s sake, if the ordinary course of business defense were to fail, J&A also showed that Defendant provided at least $10,540 as subsequent new value after some preference period transfers that remained unpaid and could be set off from the total claim.

Finally, J&A proved that Defendant received the transfers in consideration for services supplied according to contractual terms between the parties. They are thus immune from Trustee’s fraudulent claims.

Based on our defenses, the Trustee dismissed the case for no payment.

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Jones & Associates

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