Bostwick Laboratories, Inc. – Preference Defense Lawyer

On March 13, 2019, James Patrick Carroll, as Plan Administrator for Post-Effective Date Debtors Bostwick Laboratories, Inc. and Bostwick Laboratories Holdings, Inc. (“Plaintiff”), began filing complaints seeking to avoid and recover alleged preferential and/or fraudulent transfers pursuant to Sections 547, 548, and 550 of the United States Bankruptcy Code. Plaintiff seeks to avoid and recover from Defendant, or from any other person or entity for whose benefit the transfers were made, all preferential transfers of property that occurred during the ninety (90) day period prior to the commencement of the bankruptcy proceedings of debtors Bostwick Laboratories, Inc. and Bostwick Laboratories Holdings, Inc. Approximately 32 such complaints have been filed to date.

Procedural History:

On March 15, 2017 (the “Petition Date”), Debtors Bostwick Laboratories, Inc. and Bostwick Laboratories Holdings, Inc. each commenced a Bankruptcy case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

On July 11, 2017, the Debtors filed their Combined Plan and Disclosure Statement for Bostwick Laboratories, Inc. and Bostwick Laboratories Holdings, Inc. (the “Plan”). On September 15, 2017, the Court entered the Findings of Facts, Conclusions of Law, and Order Confirming Debtors’ Combined Plan and Disclosure Statement for Bostwick Laboratories, Inc. and Bostwick Laboratories Holdings, Inc. [Docket No. 547] (the “Confirmation Order”), thereby approving the Plan.

These adversary actions are before the Honorable Brendan L. Shannon.

Background, as alleged by Plaintiff:

The Debtors were an independent, full-service anatomic pathology laboratory and specialty provider of diagnostic testing services for urologists and gynecologists in the United States. The Debtors also served as a reference laboratory offering a suite of anatomic pathology and molecular testing services to independent physicians nationally.

The Debtors derived much of their revenue from key commercial and government contracts, where its services were considered “in network” under national commercial health insurance plans, Medicare and over twenty-five (25) state Medicaid programs.

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 Bostwick Laboratories, Inc. or Bostwick Laboratories Holdings, Inc. and especially if you have received a demand letter or a complaint or if a complaint has been filed even if not yet served against you or your business, contact us here, 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.