Category Archives: Elements (11 U.S.C. § 547(b))

D.C. Bankruptcy Court Finds Pillowtex Analysis Not Required for Retaining Section 327(e) Professional

By Evan T. Miller, Esq.

In a helpful reminder for professionals regarding the nuances of 11 U.S.C. § 327 and its intersection with preference law, the Bankruptcy Court for the District of Columbia recently overruled a creditor’s objection to a debtor’s application (the “Application”) to retain special counsel under section 327(e).  The objection, filed in In re Core Communications, Inc., Case No. 17-00258, was based in part upon the fact that the debtor and proposed counsel (the “Professional”) had not provided a “Pillowtex Analysis” in support of the Application – i.e., an analysis disclosing any debtor payments made to the Professional in the 90 days prior to the Petition Date (the “Preference Period”).  The creditor maintained this assertion, notwithstanding the fact that the Professional had waived any claims it had against the estate.

The Court rejected the creditor’s argument.  Judge S. Martin Teel began with a recitation of professional retention guidelines and jurisprudence, noting that “[a] court authorizing the retention of professionals under 11 U.S.C. § 327(a) must determine whether the professional is disinterested, including whether the professional is the recipient of a preferential transfer.” In re Core Commc’ns, Inc., 2017 WL 5151674, at *3 (Bankr. D.D.C. Nov. 5, 2017) (citing In re Pillowtex, Inc., 304 F.3d 246 (3d Cir. 2002)).  While the Application did not disclose whether the debtor made any payments to the Professional during the Preference Period, the Court found the Application was made pursuant to 11 U.S.C. § 327(e), and as such, “adverse interests that would disqualify an attorney from being retained under § 327(a) are distinguishable from adverse interests that would disqualify an attorney from being retained under § 327(e).” Id. (quoting Giuliano v. Young (In re RIH Acquisitions NJ, LLC), 551 B.R. 563, 569 (Bankr. D. N.J. 2016).  Under section 327(e), “the attorney being retained only needs to be disinterested with respect to the matter on which such attorney is to be employed.” Id. (internal quotations omitted).  As a result, there was no need to “disclose the existence of any preferences incident to the Application.Id.

A copy of the Opinion can be found here.

 

 

 

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Are Customer Funds Held by Debtor Logistics Company Property of the Debtor’s Estate? Chief Judge Ferguson (D.N.J.) Addresses Multiple Avoidance Issues in TransVantage Solutions

By Evan T. Miller, Esq.

Bankruptcies involving logistics management companies inherently involve unique issues with respect to avoidance actions, be it the tripartite nature of the transactions (customer/debtor/carrier), the contentious dispute over what constitutes property of the estate, and so on. Continue reading

Third Circuit Addresses Issue of First Impression in Finding the Payee Irrelevant for Purposes of Applying Section 547(c)(9)’s Aggregate Value Threshold in In re Net Pay Solutions, Inc.

By Evan T. Miller, Esq.

The United States Court of Appeals for the Third Circuit recently addressed an issue of first impression – whether a Chapter 7 trustee (the “Trustee”) could avoid multiple small-dollar payments to the Internal Revenue Service (“IRS”) that the debtor (the “Debtor”) had made on behalf of multiple clients, on the basis that all of the payments were made to the same payee. Continue reading

Revised on Remand: Judge Walrath Reduces Defendant’s New Value Defense and Awards the Trustee Prejudgment Interest in Remanded Proceeding

By Gregory J. Flasser, Esq.

On March 29, 2016, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware (the “Court”) issued an opinion reducing the new value defense of Prudential Real Estate and Relocation Services, Inc., and Prudential Relocation, Inc. (collectively, “Prudential”) and awarding the chapter 7 trustee (the “Trustee”) prejudgment interest in Prudential Real Estate v. Burtch (In re AE Liquidation, Inc.), Adv. Proc. No. 10-55543 (MFW), 2016 WL 1238848 (Bankr. D. Del. Mar. 29, 2016). Continue reading

Is Denial of Receipt Enough to Contest Service Under 12(b)(5)? Must a Preference Complaint Allege More Than Recipient, Transfer Date, and Amount to Satisfy Twombly/Iqbal? Judge Sontchi Clarifies Delaware’s View

By Evan T. Miller, Esq.

Proper service and the degree of complaint detail are recurring issues in avoidance action jurisprudence.  In the United States Bankruptcy Court for the District of Delaware, at least, Judge Sontchi has provided guidance on both issues in an opinion that should be equally instructive to plaintiffs and defendants. Continue reading

Chief Judge Stark (D. Del.) Issues a Pair of Opinions Addressing New Value, Ordinary Course of Business, and Earmarking Defenses (Part II)

By Evan T. Miller, Esq.

“Payment Plan” Payments Not Necessarily Ordinary

The second of Chief Judge Stark’s two September opinions is Prudential Real Estate v. Burtch (In re AE Liquidation, Inc.), 2015 WL 5301553 (D. Del. Sept. 10, 2015). Continue reading

Chief Judge Stark (D. Del.) Issues a Pair of Opinions Addressing New Value, Ordinary Course of Business, and Earmarking Defenses (Part I)

By Evan T. Miller, Esq.

The U.S. District Court for the District Court recently issued two opinions addressing lower court appeals which turned on the statutory defenses provided for in 11 U.S.C. §§ 547(c)(2) and (4), in addition to the availability of the “earmarking doctrine”. Continue reading