In every bankruptcy case, there is a “Trustee”, or someone vested with the powers and duties of a trustee, who can assert claims against both the debtor and non-debtors who have received property from the debtor before or during the bankruptcy case. Actions by the Trustee against non- debtor recipients most commonly fall into two categories.
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PREFERENCE:
Preference is a legal concept created by statute in the Bankruptcy Code. It Is a government public policy decision that limits the ability of the debtor to choose who is going to be paid from the debtor’s assets within certain time periods prior to bankruptcy. Since this law cannot possibly be effective until the bankruptcy case is actually filed, the law acts retroactively to recover certain payments or debts made prior to the case filing.
Any creditor paid more than certain minimal amounts within the 90 days prior to the bankruptcy filing may be subject to lawsuit to “give back” the money they were paid. If monies were paid by the debtor to or for the benefit of a family member or other entity considered to be an “insider” of the debtor, monies paid on debts within a year prior to the bankruptcy may be subject to recovery. This is a complex area. There are defenses and setoffs that are available.
“Preference”-not a concept familiar to the public. When a creditor receives payment just before a bankruptcy is filed, they are generally greatly relieved to have received some payment. They are similarly greatly outraged when a Trustee contacts them to insist upon return of the monies. Since the monies have usually been long spent, it is now question of money owed by the recipient to the Trustee. The former creditor now may owe a debt.
In these circumstances, I will help the creditor to understand the nature of the action, assess the existence of a preferential payment, and discuss the defenses and setoffs to see what the likely outcome of litigation would be. Many times these matters can be settled if they can be accurately assessed as to liability, defenses, and even collectibility. Contact us for further information.
Pecarek & Herman, Chartered
200 Clearwater-Largo Road South
Largo, FL 33770-1330
Phone: 727-584-8161
Fax: 727-586-5813
Pecarek & Herman, Chartered, in Largo, Florida, represents clients in Tampa Bay and throughout Hernando County, Hillsborough County, Pasco County, and Pinellas County, including the cities of Belleair, Brooksville, Clearwater, Dade City, Dunedin, New Port Richey, Largo, Palm Harbor, Pinellas Park, Port Richey, St. Petersburg, Seminole, Tampa, and Tarpon Springs, Florida.
