Friedmans liquidating trust
The trustee argued that, as of the petition date, the creditors had not decided whether or not to assume their existing agreements with the debtor.
And, because the hypothetical liquidation analysis of § 547(b)(5) must be conducted as of the petition date, the trustee argued that the defendants should be in no better position than general unsecured creditors.
As part of his efforts to liquidate Circuit City’s estates, the liquidating trustee commenced numerous preference actions – one of which was brought against Sony Electronics, Inc.
Prepetition, Sony and Circuit City had entered into a “Dealer Agreement” under which Sony sold goods to Circuit City and Circuit City received various funding incentives.
made allegedly preferential payments to the Port Authority of New York and New Jersey, the Sabre Group and the CIT Group, pursuant to existing contracts it had with each.
To reduce Roth’s subsequent new value defense would serve only to undermine the purpose of the wage order and ignore Roth’s rights afforded by that order.The 2005 Amendments to the Bankruptcy Code ushered in section 503(b)(9) of the Bankruptcy Code, which grants trade creditors an administrative expense for goods sold to the debtor in the ordinary course of the debtor’s business and that the debtor received within 20 days prior to the commencement date.Trade creditors also may face preference litigation for payments they received prior to the petition date, but may be able to reduce or eliminate their preference exposure by asserting a “new value” defense under section 547(c)(4) of the Bankruptcy Code (one of the more frequently raised defenses to preference liability).Background Before it went out of business, Circuit City was a national electronic retailer operating in over 700 stores throughout the United States and Puerto Rico.In late 2008, Circuit City sought bankruptcy protection in the United States Bankruptcy Court for the Eastern District of Virginia.