Beauty Brands, LLC – Preference and Fraudulent Transfer Defense Lawyer

On January 4, 2021, David W. Carickhoff, in his capacity as the chapter 7 trustee of Beauty Brands, LLC and its affiliated debtor entities filed approximately 31 complaints seeking to to avoid and recover preferential and/or fraudulent transfers and to disallow any claims held by the individual defendants.

The debtors in these cases are: Beauty Brands, LLC; Beauty Brands Payroll Holdings, Inc.; and Beauty Brands Payroll, LLC.

Procedural History:
On January 6, 2019 each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

On February 25, 2019, the Court entered an Order converting the Chapter 11 Cases to cases administered under chapter 7 of the Bankruptcy Code. David W. Carickhoff was then appointed as chapter 7 trustee for the Debtors’ estates.

These adversary actions are before the Honorable Christopher S. Sontchi.

Background, as alleged by Plaintiff:

Prior to the Conversion Date, the Debtors operated specialty beauty stores under
the trade name “Beauty Brands” that provided salon and spa services and retail and third-party branded beauty products.

Common Defenses in Preference Actions

The United States Bankruptcy Code provides many affirmative defenses to preference actions, contained within Section 547(c). For example, the most common defenses that may be available to a Defendant under Section 547(c) may include:

• the transfer was a contemporaneous exchange for new value given to the debtor (i.e., the debtor received something of value in exchange for the transfer); 11 U.S.C. §547(c)(1);
• after such transfer, Defendant gave new value to or for the benefit of the debtor (i.e., the Defendant extended additional credit to the Debtor after receiving the transfer) 11 U.S.C. §547(c)(4); or
• the transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the recipient (i.e., Defendant made the transfer under ordinary business terms). 11 U.S.C. §547(c)(2).

For more information, see our pages on Preference Defense Litigation: http://www.tobialaw.com/practice-areas/delaware-preference-defense-lawyer/ and Fraudulent Transfer Defense Litigation: https://www.tobialaw.com/practice-areas/delaware-preference-defense-lawyer/defense-of-fraudulent-transfer-actions/

If you conducted business with Beauty Brands, LLC or any of the related debtors, and especially if a complaint has been filed against you or your business, even if not served yet, email us at info@tobialaw.com or call the firm’s Wilmington offices directly at (302) 655-5303 to schedule an initial consultation. We can discuss the situation and share with you our initial observations at no charge.