Arena Football League LLC – Preference and Fraudulent Transfer Defense Lawyer

On November 24, 2021, Plaintiff Don A. Beskrone, as Chapter 7 Trustee for Arena Football League LLC, began filing complaints in adversary proceedings, pursuant to sections 547, 548, 549 and/or and 550 of the Bankruptcy Code, seeking to avoid and recover certain transfers made to the individual defendant(s) within 90 days prior to the commencement of the Debtors’ Bankruptcy cases, and to disallow any claims held by the individual defendants. To date, approximately 19 such complaints have been filed.

The Debtors in these chapter 7 cases are Arena Football League LLC (“the AFL Debtor”) and Arena Football One, L.L.C. (the “AF One Debtor”).

Procedural History:

On November 27, 2019 (the “AFL Petition Date”), the AFL Debtor commenced its chapter 7 case in the United States Bankruptcy Court for the District of Delaware. That same day, Don A. Beskrone was appointed interim Chapter 7 Trustee of the AFL Debtor’s bankruptcy estate. On January 7, 2020, a meeting of creditors under and pursuant to 11 U.S.C. § 341(a) was held. No election took place and Don A. Beskrone serves as the Chapter 7 Trustee of the AFL Debtor and its estate pursuant to 11 U.S.C. § 702(d).

On February 20, 2020 (the “AF One Petition Date”), Arena Football One, L.L.C., the AF One Debtor commenced its chapter 7 case in the United States Bankruptcy Court for the District of Delaware. That same day, Don A. Beskrone was appointed interim chapter 7 Trustee of the AF One Debtor’s bankruptcy estate. On April 8, 2020, a meeting of creditors under and pursuant to 11 U.S.C. § 341(a) was held and concluded. No election took place and Don A. Beskrone serves as the Chapter 7 Trustee of the AF One Debtor and its estate pursuant to 11 U.S.C. § 702(d).

By order of the Court entered March 31, 2020, the cases of the AFL Debtor and the AF One Debtor are jointly administered.

These adversary actions are before the Honorable John T. Dorsey.

Background, as alleged by Plaintiff:

“Prior to their respective Petition Dates, each of the Debtors at some point in time owned and operated the Arena Football League, … a professional indoor tackle football league.”

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 page on Preference Defense Litigation: http://www.tobialaw.com/practice-areas/delaware-preference-defense-lawyer/

If you conducted business with any of the Arena Football League LLC Debtors and especially if you have received acomplaint or a demand letter, or 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.