DA Liquidating Corp. – Preference Defense Lawyer

On September 13, 2018, George L. Miller, as the Chapter 7 Trustee for the estates of DA Liquidating Corp. and related debtors, 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 58 such complaints have been filed to date.

Procedural History:

On September 15, 2016 (the “Petition Date”), each Debtor commenced a Bankruptcy case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code. On June 7, 2017, the Court entered an order converting the Debtors’ cases to Chapter 7 cases. Case No. 16-12051-LSS.

The Debtors in these chapter 7 cases are the following entities: DA Liquidating Corp., f/k/a Delivery Agent, Inc., MusicToday Liquidating LLC, f/k/a Musictoday, LLC, Clean Fun Liquidating Corp., f/k/a Clean Fun Promotional Marketing, Inc., and Shop the Shows Liquidating LLC, f/k/a Shop the Shows, LLC.

These adversary actions are before the Honorable Laurie Selber Silverstein.

Background, as alleged by Plaintiff:

Debtors operated three (3) businesses: (i) an e-commerce business; (ii) a promotional marketing business; and (iii) a television commerce business.
Through the e-commerce business, the Debtors provided a proprietary ecommerce technology platform to its partners through exclusive multi-year agreements that typically included revenue sharing provisions. The Debtors powered hundreds of digital commerce storefronts which offered thousands of products relating to TV shows, movies, music, sports and artists. Delivery Agent also provided in-house services that include website operations, product design, development, merchandising, order fulfillment, and customer service.
Through the promotional marketing business (also known as “Clean Fun”), the
Debtors enabled major entertainment, media, and consumer brands to address their business and marketing needs. The Debtors’ promotional marketing services included product design, product development, and account management.
Through the television commerce business, Delivery Agent launched a television commerce (t-commerce) platform called “ShopTV.” The ShopTV platform enabled brands to launch interactive advertising campaigns and also allowed television
audiences to shop directly from the television using the ShopTV app found within the smart hub of tens of millions of connected television devices. Television commerce is an area of business pioneered by the Company and its strategic partners in the media, smart TV and advertising sectors.

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 Delivery Agent, Inc. 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.