CL H Winddown LLC (CarbonLite) – Preference and Fraudulent Transfer Defense Lawyer

Beginning on March 6, 2023, Amanda Demby Swift, as liquidation trustee of the CarbonLite Liquidation Trust, began filing complaints, opening adversary proceedings, seeking to avoid and recover certain transfers as allegedly preferential, or in the alternative as fraudulent transfers, and to disallow the claim(s) held by individual defendants. Approximately 15 such complaints have been filed thus far.

Specifically, Plaintiff seeks to claw back certain payments made to the individual Defendants, avoiding and recovering all (a) preferential transfers of property of the Debtors that occurred during the ninety (90) day period prior to the commencement of the bankruptcy proceedings, pursuant to sections 547 and 550 of the Bankruptcy Code and, (b) in the alternative, any transfers that may have been fraudulent conveyances pursuant to sections 544, 548 and 550 of the Bankruptcy Code.

In addition, Plaintiff seeks to disallow, pursuant to sections 502 of the Bankruptcy Code, any claim that the individual Defendant has filed or asserted against the Debtors or that has been scheduled for the individual Defendant.

The Debtors in these chapter 11 cases are: CarbonLite Holdings LLC; CarbonLite Industries LLC; CarbonLite P Holdings LLC; CarbonLite P LLC; CarbonLite PI Holdings LLC; CarbonLite Pinnpack LLC; CarbonLite Recycling Holdings LLC; CarbonLite Sub-Holdings, LLC; Pinnpack P, LLC; CarbonLite Recycling LLC; and Pinnpack Packaging LLC.

Procedural History:

On March 8, 2021, each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code. The Bankruptcy Court authorized the joint administration of the Cases.

On September 7, 2021, the Bankruptcy Court entered an order confirming Debtors’ First Amended Chapter 11 Plan of Liquidation. The Plan became effective on September 20, 2021 on which date the CarbonLite Liquidation Trust was established.

The bankruptcy case and these adversary actions are before the Honorable Judge John T. Dorsey.

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/

The following Adversary Proceedings were filed in the Delaware Bankruptcy Case of CL H Winddown LLC, et al.

23-50123-JTD Swift v. B & B Plastic Recyclers, Inc.
23-50124-JTD Swift v. C.H. Robinson Worldwide, Inc.
23-50125-JTD Swift v. Cigna Health and Life Insurance Company
23-50126-JTD Swift v. Halimi
23-50127-JTD Swift v. Fairmont Logistics LLC
23-50128-JTD Swift v. Hoover Transit, Inc.
23-50129-JTD Swift v. J.D.M.L., Inc.
23-50130-JTD Swift v. Nahai Insurance Services, Inc.
23-50131-JTD Swift v. Paarang US Inc.
23-50132-JTD Swift v. Precise Personnel LLC
23-50133-JTD Swift v. Pro Farm Trucking, Inc.
23-50134-JTD Swift v. Quality Freight Logistics, Inc.
23-50135-JTD Swift v. Sterling Industries LP d/b/a American Supply Company
23-50136-JTD Swift v. System Packaging Co., Inc.
23-50137-JTD Swift v. Tri County Tool Inc.

If you conducted business with any of the CarbonLite affiliated debtors and especially if you have received a demand letter, or if a complaint has been filed against you or your business, even if not served yet, 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 you are facing and share with you our initial observations at no charge.