Preferential Payments Under Bankruptcy

Anyone else ever get one of these letters? I was originally going to ask for legal advice but did some quick web research and told them to f*** off.

Basically, any "creditor" that received payments in the 90 day period prior to a company filing for bankruptcy gets this letter from the trustee or collector demanding you pay the money back or you will be sued. While I understand the intent (for companies to not play favorites when settling debts before officially filing) it is maddening for someone that did honest regular work for a troubling company.

Herbie Green wrote:Anyone else ever get one of these letters?  I was originally going to ask for legal advice but did some quick web research and told them to f*** off.

Basically, any "creditor" that received payments in the 90 day period prior to a company filing for bankruptcy gets this letter from the trustee or collector demanding you pay the money back or you will be sued.  While I understand the intent (for companies to not play favorites when settling debts before officially filing) it is maddening for someone that did honest regular work for a troubling company.  

I've received them, it is a standard practice once a company enters bankruptcy.

I'm not a lawyer, and this was all several years ago - but my recollection is that these are only considered preference if they were paid outside the normal terms of payments. Of course you will have to prove what the normal terms of payments have been, using actual billing and payments dates not what is says on your purchase orders or sales contracts. Also, there is some way too offset your losses in bankruptcy against what they want to claw back as a preference. If it is a large enough sum of money, then you need to lawyer up with an attorney experience in this.

I will tell you that my worst experience in a preference claim was during a mediation hearing when my attorney said we had a very good case that we should not owe any payment back - however the attorney working the other side basically told us that he was paid by the trustee, he was paid first dollar (meaning he was paid first before anyone else) and that he didn't care if either way if we took his settlement offer or not. He made more money, personally, if we fought the claim and he had to go to court....and their settlement offer was less than what my attorney said it would cost to fight it. Pissed me off, but we settled.