Baldwin Haspel Burke & Mayer LLC

Preference Actions in Bankruptcy

Lance Arnold - 

If you received payments from a now bankrupt entity during the preference period you may be subject to a Preference Action seeking recovery of all payments during that period, most commonly 90 days prior to the date the bankruptcy was filed. While there are defenses, many businesses that receive a Preference Action fail to respond. This may be for a variety of reasons, but most likely because many businesses do not realize they have been served. These actions may be served by First Class Mail and there is national service and jurisdiction. Failure to respond results in a default judgment which can then be enforced against you.  If you receive a pleading by mail from a bankruptcy court that seeks recovery of payments, do not ignore it, rather seek advice of counsel promptly to avoid an unfortunate and expensive surprise down the road.


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