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Information About Bankruptcy Litigation

Each Chapter 7 and Chapter 13 bankruptcy proceeding is assigned to a trustee, an attorney designated by the U.S. Trustee’s Office who will administer the case. In a Chapter 11 case, usually the debtor’s management administers the case and is generally referred to as the “Debtor-In-Possession.”

Bankruptcy trustees and debtors-in-possession have the duty to preserve all assets of a bankruptcy estate, and where appropriate, to recover the value of that property for the benefit of creditors, to allow for maximum distribution to creditors. As a result, estate administrators often sue parties who have received property of the bankruptcy estate, in the form of a pre-petition payment made by the debtor, within 90 days of the filing of the bankruptcy petition. Estate administrators may also commence law suits against parties who received property from a debtor pre-petition through what may be found to be a fraudulent conveyance, even though there may not have been any intent to defraud creditors. Essentially, these types of transfers deplete the debtor’s bankruptcy estate of funds that could otherwise be distributed to creditors.

It may be unclear to many individuals or businesses, who have been sued by estate administrators in a pending bankruptcy case, why they were sued when they provided the debtor with the goods or services for which they were paid in the first place. One of the goals of bankruptcy, however, is to promote equal and fair distribution of the debtor’s property to similarly situated creditors. Under the Bankruptcy Code, it is deemed unfair when a party receives a payment from a debtor while others either did not receive any payment or received significantly less.

Do not, however, simply assume that because you have been sued and you did in fact receive funds from a debtor within 90 days, that your only choice is to pay the estate administrator the amount sued for. The Bankruptcy Code provides numerous defenses to these types of law suits. You may be able to defeat the law suit in its entirety. Even when you do not have a complete defense, by asserting and successfully arguing certain partial defenses, you may be able to settle the action for an amount significantly less than the amount the estate administrators seeks to recover.

The attorneys of Tully Rinckey, PLLC, are experienced bankruptcy litigators. We have represented defendants (individuals and companies) who were sued by estate administrators to recover those types of transfers. We have also represented plaintiffs (trustees and debtors-in possession) seeking to recover same in adversary proceedings in U.S District Courts, U.S. Bankruptcy Courts, and state Supreme Courts.

Speak With Us

If you have questions regarding bankruptcy litigation or other legal issues related to preference or fraudulent transfer actions, please contact an attorney at Tully Rinckey, PLLC today. Our lawyers can help you avoid the legal complications and difficulties that often arise in bankruptcy litigation. We will review your situation and help you determine what the right step is for you.

To speak with an experienced bankruptcy attorney, call our offices at 1-888-529-4543 or send an email to info@1888Law4Life.com.

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Albany, Altamont, Amsterdam, Berne, Bethlehem, Brunswick, Clifton Park, Cohoes, Colonie, Coeymans, Delaware, Duanesburg, East Greenbush, Fulton, Glens Falls, Glenville, Gloversville, Grafton, Greene, Guilderland, Hoosick, Hudson, Johnstown, Malta, Mechanicville, Menands, Montgomery, Nassau, New Scotland, Rensselaer, Rensselaerville, Rotterdam, Saratoga, Schenectady, Schoharie, Schodack, Scotia, Troy, Ulster, Voorheesville, Warren, Washington, Watervliet