Constellation Enterprises LLC – Preference Defense Lawyer

On September 25, 2018, David W. Carickhoff, as the chapter 7 trustee of Columbus Steel Castings Company, 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. Approximately 37 such complaints have been filed to date.

Procedural History:

On May 16, 2016 (the “Petition Date”), each Debtor commenced a Bankruptcy case by filing a voluntary petition for relief under chapter 7 of the Bankruptcy Code. The Debtors’ chapter 7 cases are jointly administered under Case No. 16-11213 (CSS).

The Debtors in these chapter 7 cases are the following entities: Constellation Enterprises LLC; JFC Holding Corporation; The Jorgensen Forge Corporation; Columbus Holdings Inc.; Columbus Steel Castings Company; Zero Corporation; Zero Manufacturing, Inc.; Metal Technology Solutions, Inc.; Eclipse Manufacturing Co.; and Steel Forming, Inc.

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

Background, as alleged by Plaintiff:

“the Debtors operated 4 separate businesses including a “Columbus Castings” business that was operated by Columbus Steel…[L]ess than a month before the Petition Date, Columbus Castings had over 750 employees and was the largest single site steel foundry in North America, manufacturing castings for freight and passenger rail cars locomotives, mining equipment, industrial magnets, construction equipment, and heavy industrial industries..”

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 Constellation Enterprises LLC or any of the Debtors and especially if you have received a demand letter or a complaint or if a complaint has been filed but 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.