The Worth Collection, LTD. – Preference and Fraudulent Transfer Defense Lawyer

Beginning on March 21, 2023, Douglas T. Tabachnik, in his capacity as the chapter 7 trustee of the bankruptcy estate of The Worth Collection, Ltd., began filing complaints, opening adversary proceedings, seeking to avoid and recover certain transfers made to the individual defendants and to disallow the claim(s) held by individual defendants. Approximately 163 such complaints have been filed thus far.

The complaints essentially allege that the transfers were preferential and/or fraudulent under the Bankruptcy Code and state law, and to disallow the claim(s) held by individual defendants.

Specifically, through the comprehensive complaints, Plaintiff seeks to claw back certain payments made to the individual Defendants, avoiding and recovering all (a) preferential transfers of property of the Debtors that occurred during the ninety (90) day period prior to the commencement of the bankruptcy proceedings, pursuant to sections 547 and 550 of the Bankruptcy Code, and/or (b) any transfers that may have been fraudulent conveyances pursuant to sections 544, 548 and 550 of the Bankruptcy Code and/or delaware state law, 6 Del C. §§ 1304, 1305, 1307.

In addition, Plaintiff seeks to disallow, pursuant to sections 502 of the Bankruptcy Code, any claim that the individual Defendant has filed or asserted against the Debtors or that has been scheduled for the individual Defendant.

Procedural History:

On February 14, 2020, an involuntary petition was filed against the Debtor under chapter 7 of the Bankruptcy Code in the Bankruptcy Court, thereby
commencing the Chapter 7 Case.

On March 24, 2021, the Bankruptcy Court entered an Order for Relief against the Debtor, thereby allowing the Chapter 7 Case to proceed.

On June 23, 2021, the Bankruptcy Court entered an order appointing Douglas T. Tabachnik as the chapter 7 trustee to administer the Chapter 7 Case.

The bankruptcy case and these adversary actions are before the Honorable Judge Brendan L. Shannon.

Background Specific to the Debtor’s Sales Agents, as alleged by Plaintiff:

16. A significant element of the Debtor’s business model involved engaging numerous independent contractors as sales agents for the marketing and sale of high-end women’s apparel.
17. The Debtor referred to such sales agents as “stylists.”
18. Many of the Debtor’s sales agents maintained friendships and relationships with individuals who were likely to purchase the Debtor’s high end women’s apparel.
19. Many of the Debtor’s sales agents performed their services for the Debtor on a parttime, rather than full-time, basis.
20. The agreements between the Debtor and its sales agents provided for commissions to be paid to such sales agents for the sale of the Debtor’s merchandise.
21. In addition to commissions, the Debtor’s sales agents also could receive sales incentives, free merchandise, and reduced cost merchandise from the Debtor.
22. The Debtor had multiple tiers of contracts with its independent contractors, including what it termed as “Agency Leaders,” “Associate Agency Leaders,” and “Associates.”
23. Certain independent contractors of the Debtor would receive commissions based not only on what merchandise they sold themselves, but would additionally receive commissions based on what merchandise other independent contractors of the Debtor sold.
24. For example, an independent contractor of the Debtor that qualified as an “Agency Leader” could earn commissions on merchandise sold by certain other independent contractors of the Debtor.

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/

The following Adversary Proceedings were filed in the Delaware Bankruptcy Case of The Worth Collection, LTD.

23-50154-BLS Tabachnik v. American Express
23-50155-BLS Tabachnik v. Better Pak Container Corp.
23-50156-BLS Tabachnik v. Coroc / Hilton Head I L.L.C.
23-50157-BLS Tabachnik v. Eagle Logistic Service, Inc.
23-50158-BLS Tabachnik v. NEW 520 GSH LLC
23-50159-BLS Tabachnik v. Parkwood Seven, LLC
23-50160-BLS Tabachnik v. PIXAVO, LLC
23-50161-BLS Tabachnik v. Lombardo & Partners, LLC
23-50162-BLS Tabachnik v. Sino American Knitwear (H.K.) Ltd.
23-50163-BLS Tabachnik v. Evenica Corp.
23-50164-BLS Tabachnik v. Baena
23-50165-BLS Tabachnik v. Gabay
23-50166-BLS Tabachnik v. Wilferth
23-50167-BLS Tabachnik v. Shelby
23-50168-BLS Tabachnik v. Holmen
23-50169-BLS Tabachnik v. Crump
23-50170-BLS Tabachnik v. Evans
23-50171-BLS Tabachnik v. Mullican
23-50172-BLS Tabachnik v. Gunn
23-50173-BLS Tabachnik v. Moore
23-50174-BLS Tabachnik v. Borden
23-50175-BLS Tabachnik v. Steele
23-50176-BLS Tabachnik v. McCann
23-50177-BLS Tabachnik v. Barta
23-50178-BLS Tabachnik v. Crane
23-50179-BLS Tabachnik v. Villers
23-50180-BLS Tabachnik v. Reed
23-50181-BLS Tabachnik v. Troutman
23-50182-BLS Tabachnik v. Lawrence-Hegner
23-50183-BLS Tabachnik v. Fredrickson
23-50184-BLS Tabachnik v. Wasson
23-50185-BLS Tabachnik v. Bond
23-50186-BLS Tabachnik v. Burke
23-50187-BLS Tabachnik v. McElhinney
23-50188-BLS Tabachnik v. Tomazin
23-50189-BLS Tabachnik v. Mackey
23-50190-BLS Tabachnik v. Olson
23-50191-BLS Tabachnik v. Mardre
23-50192-BLS Tabachnik v. Ochab
23-50193-BLS Tabachnik v. Hord
23-50194-BLS Tabachnik v. Mills
23-50195-BLS Tabachnik v. Ladines
23-50196-BLS Tabachnik v. Fleming
23-50197-BLS Tabachnik v. Hofmann
23-50198-BLS Tabachnik v. McCarroll
23-50199-BLS Tabachnik v. Baker
23-50200-BLS Tabachnik v. Watson
23-50201-BLS Tabachnik v. Yanke
23-50202-BLS Tabachnik v. Javello
23-50203-BLS Tabachnik v. Morrow
23-50204-BLS Tabachnik v. Burer
23-50205-BLS Tabachnik v. Covell
23-50206-BLS Tabachnik v. Nullman
23-50207-BLS Tabachnik v. Corral
23-50208-BLS Tabachnik v. Jarvis
23-50209-BLS Tabachnik v. Palmer
23-50210-BLS Tabachnik v. Greenspan
23-50211-BLS Tabachnik v. Torgal
23-50212-BLS Tabachnik v. Gilly
23-50213-BLS Tabachnik v. Moore
23-50214-BLS Tabachnik v. Mahoney
23-50215-BLS Tabachnik v. Cooke
23-50216-BLS Tabachnik v. Weaver
23-50217-BLS Tabachnik v. Boesch
23-50218-BLS Tabachnik v. Hines
23-50219-BLS Tabachnik v. Middlesworth
23-50220-BLS Tabachnik v. Pfeffer
23-50221-BLS Tabachnik v. Maxwell
23-50222-BLS Tabachnik v. Sleeper
23-50223-BLS Tabachnik v. Callaway
23-50224-BLS Tabachnik v. Thompson
23-50225-BLS Tabachnik v. Gibbs
23-50226-BLS Tabachnik v. Fernandez
23-50227-BLS Tabachnik v. Quigley
23-50228-BLS Tabachnik v. Kendrick
23-50229-BLS Tabachnik v. Crawford
23-50230-BLS Tabachnik v. DeRienzo
23-50231-BLS Tabachnik v. DeForest
23-50232-BLS Tabachnik v. Smith
23-50233-BLS Tabachnik v. Bryant
23-50234-BLS Tabachnik v. Muzzy
23-50235-BLS Tabachnik v. Mavrides
23-50236-BLS Tabachnik v. Fickinger
23-50237-BLS Tabachnik v. Bouchein
23-50238-BLS Tabachnik v. House
23-50239-BLS Tabachnik v. Fite
23-50240-BLS Tabachnik v. Watson
23-50241-BLS Tabachnik v. Epifanio
23-50242-BLS Tabachnik v. Dunkel
23-50243-BLS Tabachnik v. Bebout
23-50244-BLS Tabachnik v. Nini
23-50245-BLS Tabachnik v. Davis
23-50246-BLS Tabachnik v. Solomon
23-50247-BLS Tabachnik v. Majev
23-50248-BLS Tabachnik v. Ventresca
23-50249-BLS Tabachnik v. Faryniarz
23-50250-BLS Tabachnik v. Willets
23-50251-BLS Tabachnik v. Kennedy
23-50252-BLS Tabachnik v. Hewlett
23-50253-BLS Tabachnik v. Bellin
23-50254-BLS Tabachnik v. Cooper
23-50255-BLS Tabachnik v. Mavar
23-50256-BLS Tabachnik v. McGillen
23-50257-BLS Tabachnik v. Dyer
23-50258-BLS Tabachnik v. Owens
23-50259-BLS Tabachnik v. Peterson
23-50260-BLS Tabachnik v. Burkhart
23-50261-BLS Tabachnik v. Reid
23-50262-BLS Tabachnik v. Black
23-50263-BLS Tabachnik v. Badalamenti
23-50264-BLS Tabachnik v. Prew
23-50265-BLS Tabachnik v. Welch
23-50266-BLS Tabachnik v. Blackburn
23-50267-BLS Tabachnik v. Bazarian
23-50268-BLS Tabachnik v. Chenot
23-50269-BLS Tabachnik v. Froehlich
23-50270-BLS Tabachnik v. Barnwell
23-50271-BLS Tabachnik v. Coonrad
23-50272-BLS Tabachnik v. Boone
23-50273-BLS Tabachnik v. ADO Professional Solutions, Inc.
23-50274-BLS Tabachnik v. 40 & 210 Meadowland Parkway, LLC
23-50275-BLS Tabachnik v. Dickinson
23-50276-BLS Tabachnik v. Williams
23-50277-BLS Tabachnik v. Abbott
23-50278-BLS Tabachnik v. Finnell
23-50279-BLS Tabachnik v. Fredricks
23-50280-BLS Tabachnik v. Fales
23-50281-BLS Tabachnik v. Dunkenberger
23-50282-BLS Tabachnik v. Cox
23-50283-BLS Tabachnik v. Gross
23-50284-BLS Tabachnik v. Pattison
23-50285-BLS Tabachnik v. Meybohm
23-50286-BLS Tabachnik v. Weintraub
23-50287-BLS Tabachnik v. Wilson
23-50288-BLS Tabachnik v. Conner
23-50289-BLS Tabachnik v. Thomas
23-50290-BLS Tabachnik v. Gray
23-50291-BLS Tabachnik v. Adams
23-50292-BLS Tabachnik v. Thuston
23-50293-BLS Tabachnik v. Goosman
23-50294-BLS Tabachnik v. Bergs
23-50295-BLS Tabachnik v. Ingham
23-50296-BLS Tabachnik v. DiGiglia
23-50297-BLS Tabachnik v. Parter
23-50298-BLS Tabachnik v. Dexter
23-50299-BLS Tabachnik v. Lawrence
23-50300-BLS Tabachnik v. Johnson
23-50301-BLS Tabachnik v. Usherwood
23-50302-BLS Tabachnik v. Howle
23-50303-BLS Tabachnik v. Gaines Barusch
23-50304-BLS Tabachnik v. Arnell
23-50305-BLS Tabachnik v. Lifeline Data Centers, LLC
23-50306-BLS Tabachnik v. Babij
23-50307-BLS Tabachnik v. Riverside Solutions
23-50308-BLS Tabachnik v. Stahle
23-50309-BLS Tabachnik v. Carlisle
23-50310-BLS Tabachnik v. Howard
23-50311-BLS Tabachnik v. Dieter
23-50312-BLS Tabachnik v. Smith
23-50313-BLS Tabachnik v. Miromar Outlet West, LLC
23-50317-BLS Tabachnik v. Szychowski23-50407-BLS Tabachnik v. Haynes
23-50408-BLS Tabachnik v. Wilcox
23-50762-BLS Tabachnik v. Sklaver
23-50763-BLS Tabachnik v. Grimsley
23-50764-BLS Tabachnik v. Sturtevant
23-50765-BLS Tabachnik v. Shore
23-50766-BLS Tabachnik v. IPFS of New York, LLC

If you conducted business with The Worth Collection, LTD and especially if you have received a demand letter, or if a complaint has been filed against you or your business, even if not served yet, contact us here, email us at info@tobialaw.com or call the firm’s Wilmington offices directly at (302) 655-5303 for a no cost initial consultation. We can discuss the situation you are facing and share with you our initial observations at no charge.