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Before I went into commercial real estate I was a big law bankruptcy lawyer for years. As others have mentioned, these avoidance actions are very common. In my experience, they all settle rather quickly. One line I used once when defending an action like this - which worked - was when a client was not in a good place financially was “if you pursue this, you’ll just be dealing with another trustee.” Pleading poverty actually worked in this instance and the case settled for a song.
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And insofar as the denial of a proof of claim in concerned, consider whether it’s worth spending the money on your client’s behalf. Does the debtor actually expect that there is going to be anything left? I ask because I’ve gone to bat on POC denial in some cases where the client made out ok. Others I’ve said it’s not worth the money to fight given there’s likely nothing to be distributed anyway. Judgment call.
Refer them to someone who knows what they’re doing
^
There really needs to be a commercial BK bowl. I’ve only seen a consumer one.
Have fun kids
If you’re facing an avoidance action, check out this article.
https://www.beankinney.com/wp-content/uploads/2021/09/67_JBD-How-to-Defend-Avoidance-Actions-in-Bankruptcy-Litigation-_00104494.pdf
No, but you can find one pretty easily. Just search for similar cases in your jurisdiction on westlaw/lexis. You can pull the answer from PACER.
In re: “corporation claiming bankruptcy.”
Plan administrator = plaintiff
Client = defendant.
It’s in the caption and defined throughout the chapter 11 complaint
For what it’s worth, you might want to explore settlement early on. The DIP doesn’t want to get embroiled in satellite litigation and your client doesn’t want to get totally screwed out of payment.
If it’s an avoidance action in a bankruptcy, you want someone involved who has done one before. It’s not an area to dabble.
Is this a fraudulent transfer / preference action?
I’m a BK attorney. My price point won’t work for your client, but I may be able to connect you with a friend. DM me.
I’m not a bankruptcy lawyer, but…does the term “defendant in a bankruptcy” even mean anything?
There are no defendants in bankruptcy cases, but there are defendants in bankruptcy adversary proceedings. An adversary proceeding is basically an ancillary lawsuit arising out of the underlying bankruptcy case.
Bankruptcy judicial law clerk here. Do not try to do this yourself, you are asking for a malpractice suit. We see non bankruptcy lawyers every day who think they can handle this and the trustee or DIP counsel eat them for breakfast.