True Religion Apparel, Inc. – Preference and Fraudulent Transfer Defense Lawyer

On February 11, 2022, Plaintiff, Steven Balasiano, as the avoidance actions trustee of the True Religion Avoidance Actions Trust began filing complaints in adversary proceedings, pursuant to sections 547, 548 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, or that may have been fraudulent conveyances.

To date, approximately 20 such complaints have been filed.

The Debtors in these Chapter 11 Cases are: True Religion Apparel, Inc., TRLG Intermediate Holdings, LLC, True Religion Sales, LLC, TRLGGC Services, LLC, Guru Denim LLC.

Procedural History:

On April 13, 2020, each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code.

The Court entered an order for joint administration of these chapter 11 cases for procedural purposes.

On October 6, 2020, the Court confirmed the Third Amended Joint Chapter 11 Plan of Reorganization. The Plan and Confirmation Order approved the establishment of the Avoidance Actions Trust and authorized the Avoidance Actions Trust to investigate, prosecute, settle and/or abandon certain Scheduled Avoidance Actions.

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

Background, as alleged by Plaintiff:

“The Debtors were founded in Los Angeles, California in 2002, and design, market, sell, and distribute premium fashion apparel, centered on its core denim products using the brand names “True Religion” and “True Religion Brand Jeans.”.”

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 True Religion Apparel, Inc. or its affiliated debtors and especially if you have received a complaint 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 you are facing and share with you our initial observations at no charge.