Chapter 7 Trustee in Consolidated Bedding Commences Preference Actio...
10/24/10
Introduction
Earlier this month, the Chapter 7 Trustee (the "Trustee") in the Consolidated Bedding bankruptcy commenced several avoidance actions under sections 547 and 548 of the Bankruptcy Code. Consolidated commenced this bankruptcy proceeding on May 29, 2009, when it filed petitions for bankruptcy under Chapter 7 of the Bankruptcy Code. Consolidated manufactured and sold mattresses under the trade name "Spring Air." According to documents filed with the Delaware Bankruptcy Court, Consolidated ceased operations and terminated its employees prior to filing for bankruptcy.
Events Leading to Bankruptcy
On May 13, 2009 (two weeks before filing for bankruptcy), certain lenders of Consolidated sent notices of default under the company's loan agreement. Soon after, the lenders accelerated Consolidated's loan obligations and demanded repayment. Approximately two weeks after sending the notice of default, Consolidated and its lender entered into a foreclosure agreement whereby the company agreed to sell substantially all of its assets to Spring Air International LLC. After the sale to Spring Air International, Consolidated filed for bankrupty and the Trustee was appointed.
The Avoidance Actions
As of the date of this post, the Trustee has filed over 80 avoidance actions against various defendants. These adversary actions, as well as the main case, are before the Honorable Brendan L. Shannon. The Trustee is represented by Archer & Greiner and ASK Financial LLP.
Below are other posts I have written on this blog concerning avoidance actions in Bankruptcy Court:
Decision in Archway Cookies Grants Summary Judgment Based on Ordinary Course of Business Defense
Using the Solvency Defense in a Preference Action: In re Bernard Technologies
-------------------------------------------------------------
Jason Cornell practices with the law firm Fox Rothschild LLP in Wilmington, Delaware. You can reach Jason at 302 427 5512, or [email protected].