Pre-Filing Investigation Of Defenses To A Preference Action: Whose Job Is It Anyway?

By |July 7th, 2004|Articles, Into Bankruptcy, Post Sale Issues: The Customer Has Not Paid, Preference Laws, Vendors Dealing Individually with Bankrupt Customer|0 Comments

It is clear that a plaintiff is obligated to make reasonable inquiry of the factual and legal basis of a preference claim before filing a preference action. That is, the plaintiff must investigate the existence of the prima facie elements of a preferential transfer before commencing the action. These elements include whether the alleged preferential transfer was on account of antecedent debt, made while the debtor was insolvent and within 90 days before the petition date. These elements are rarely contested. […]