Houston Preference Claim Defense Lawyers
Retaining Payments When Debtors File Bankruptcy
Under normal commercial law, a debtor is free to favor some creditors over others. For instance, a business owner might pay back a relative, business partner or important supplier before satisfying other debts. Under the Bankruptcy Code, however, such “preference payments” are avoidable because all similarly-situated creditors are presumed to have an equal claim on the debtor’s assets.
As a result, a bankruptcy judge or trustee may insist that you forfeit money or property received from a debtor within 90 days prior to the bankruptcy to be shared among the full throng of creditors. (If you are deemed to be an “insider,” preference can be construed up to one full year prior to the bankruptcy.)
There are legitimate defenses to preference claims. The creditors’ rights lawyers of Wells & Cuellar, P.C., have demonstrated results in these cases and can help you hang on to your money.
“We had a bankrupt customer who unexpectedly filed a large preference complaint against us. We had already written-off a lot of money to bad debt and I certainly didn’t look forward to telling management that they were seeking to recover over twice what we had previously written-off! Brent was able to jump right on the case; and through his tactical defense, he was able to negotiate a much better result. He was a lifesaver, thanks Brent!”
Brian T. McGee
Vice President & Credit Manager
Geary Pacific Supply
Texas and Nationwide Preference Claim Defense Attorneys
Based in Houston, we routinely handle adversary proceedings in U.S. Bankruptcy Court on behalf of business clients in Texas and are called upon to consult or make special appearances throughout the United States. Trial lawyer D. Brent Wells is board certified in Texas in Commercial and Consumer Law and nationally certified by the American Board of Certification as a Creditors’ Rights Specialist. He has litigated debt claims in state, federal and Bankruptcy Courts.
We will examine the timing and manner of so-called preference payments to determine if you should defend the claim (or ultimately negotiate a compromise of it) rather than surrendering the money to the trustee. Our team will explore all your statutory defenses such as:
- Was the debtor actually insolvent at the time of the transfer?
- Has the statute of limitations run out?
- If the transfer was made more than 90 days before bankruptcy, do you meet the statutory criteria as an “insider”?
- If the transfer occurred less than 90 days before bankruptcy, is there a statutory affirmative defense?
Affirmative defenses include “ordinary course of business,” forward contracts, contemporaneous exchange or new value. Mr. Wells is skilled at proving the elements of these defenses to strive to defeat the trustee’s claim on the proceeds of a pre-bankruptcy transaction that you entered and performed in good faith. He will always give his honest gauge of whether it makes business sense to fight this uphill fight.
Experience in Bankruptcy Preference Litigation
Contact our Houston preference claim defense attorney to discuss your situation, including strategies to protect your interests if you suspect that a debtor is on the brink of bankruptcy. We handle debt recovery (and retention of the proceeds) from negotiations to judgment to adversary proceedings.