LSC Winddown, LLC – Preference Defense Lawyer

On January 15, 2019, Limited Creditors’ Liquidating Trust (“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 LSC Wind Down LLC and its affiliated debtors. Approximately 81 such complaints have been filed to date.

Procedural History:

On January 17, 2017 (the “Petition Date”), each Debtor commenced a Bankruptcy case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

These Chapter 11 cases are jointly administered under Case No. 17-10124 (KJC). The Debtors in these chapter 11 cases are: LSC Wind Down, LLC f/k/a Limited Stores Company, LLC, LS Wind Down, LLC f/k/a Limited Stores, LLC, and TLSGC Wind Down, LLC f/k/a The Limited Stores GC, LLC.

These adversary actions are before the Honorable Kevin J. Carey.

Background, as alleged by Plaintiff:

Debtors were a multi-channel retailing company which specialized in the sale of women’s clothing. From their beginnings as a single store in the 1960s, the Debtors were able to expand over the decades by pioneering vertically integrated specialty retailing, where they controlled every element of the process, including design, production, marketing, selling, and customer service. At their peak, the Debtors operated approximately 750 brick and mortar retail locations in the United States, as well as maintaining an e-commerce channel online.
Prior to the Petition Date, the Debtors, as women’s clothing retailers, maintained
business relationships with various business entities, through which the Debtors regularly
purchased, sold, received, and/or delivered goods and services.
As women’s clothing retailers, the Debtors regularly purchased goods from various
entities including vendors, creditors, supplier s and distributors. The Debtors also regularly paidfor services used to facilitate their business.

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.