Manufacturer Collections Case Study

Client

Manufacturer 

Practice Groups Involved

Bankruptcy / Creditor’s Rights / Collections 

Client Problem/Case Background

Manufacturer provided goods to a client/debtor over the course of a two year relationship. When client filed for relief under the United States Bankruptcy Code, the bankruptcy Trustee issued demand to Manufacturer for payment of $25,200.00 which Trustee alleged represented preferential payments from client/debtor to Manufacturer due to the fact that said payments were made within the 90 days preceding the bankruptcy filing.  Trustee threatened to file suit against Manufacturer to recover the alleged preferential funds. 

DBL Resolution

DBL issued a response letter to the Trustee’s demand disputing Trustee’s claim that the funds were preferential.  DBL argued that the payments were not preferential because they were made relative to debts that had been incurred in the ordinary course of business or financial affairs between Manufacturer and its client/debtor and were further made according to the parties’ ordinary business terms as determined by a review of the parties’ dealings over the course of their two year relationship.  DBL also argued that the funds were not a preference due to the fact that Manufacturer provided new goods and services to its client/debtor after the alleged preferential payments were made.  The Trustee ultimately agreed with DBL’s position and refrained from filing suit.  As such, the Manufacturer was able to retain all of the funds demanded by the Trustee.  

Highlight of Firm’s Capabilities

DBL represents a wide range of clients in bankruptcy, creditor’s rights and collections matters.  From hospitals and regional banks to manufacturers,  landlords and small businesses, DBL can assist its clients in collecting debts both large and small.