Furniture Brands International – Preference Litigation Update

As explained in a prior post, the Liquidating Trustee had sent out demand letters, the first step towards preference litigation.  The prior post is here: Furniture Brands International – Preference Litigation has Begun.

On August 13, 2015, Alan D. Halperin, the Trustee of the FBI Wind Down, Inc. Liquidating Trust began filing preference actions.  In what is almost certainly the first of many waves of complaints, he has filed complaints against 9 companies alleging they received preferential transfers.

Defenses to a Preference Action

The Bankruptcy Code provides creditors with many defenses to preference actions. Included among these are the “ordinary course of business defense” and the “new value defense.” For reader’s looking for more information concerning claims and defenses in preference litigation, attached is a booklet I prepared on the subject: “A Preference Reference: Common Issues that Arise in Delaware Preference Litigation.”

John Bird is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  John is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach John at (302) 622-4263 or at [email protected].