In the wake of the “free money” Covid stimulus era, distressed companies are entering chapter 11 bankruptcy with eye-watering levels of funded debt, all too frequently leaving trade creditors as collateral damage. Adding insult to injury, a new trend has emerged in recent years as the lenders to hyper-leveraged debtors seek to stem their losses: Selling preference actions against trade vendors to third parties, who then pursue preference litigation against the same vendors that were likely left holding the bag in the bankruptcy case.
The speakers from Lowenstein will describe the background of this trend, discuss some war stories from actual cases where debtors have sold (or tried to sell) preference claims, and explain the impact of the Fifth Circuit’s recent decision in South Coast Supply on the monetization of preference actions that were sold to a third party. The Fifth Circuit is now the third federal appellate court to permit the sale of preference actions to a non-estate representative, an alarming trend for the trade and one that is likely to persist.
Speakers:
- Andrew Behlmann, Partner, Lowenstein Sandler LLP
- Eric Chafetz, Partner, Lowenstein Sandler LLP
Time: 1:45 p.m. ET
Location: Gaylord National Resort & Convention Center, 201 Waterfront Street, National Harbor, MD 207450
*Disclaimer: This event is open to the public but requires a registration fee.
