Commercial Bankruptcies: Settlement Strategy in a Preference Action from a Creditor's Perspective

The items below are excerpted from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of troubled companies, as well as informational and analysis highlights. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

As it relates to preference actions and settlement strategies, creditors should first perform an ordinary course of business analysis.  All transactions that creditors believe were paid within the ordinary business term should be removed.  Creditors then should subtract the total remaining potential preference claims after the ordinary course of business evaluation is made.  Then subtract any new value (depending on the jurisdiction, a creditor may need to separate the paid for and unpaid for new value).  In addition, the creditor should make certain that all the calculations made are consistent with the law in the circuit where the case has been filed.

Bear Crossing LLC, Jupiter, Fl., filed Chapter 11 in the U.S. Bankruptcy Court in Colorado. The firm listed assets and liabilities of between $10 million and $50 million each. The filing was under case number 09-31927. For more information contact the court at 720–904-7419.

Catholic Diocese of Wilmington Inc., Wilmington, De., filed Chapter 11 in the U.S. Bankruptcy Court in Delaware. The firm listed assets of between $1 million and $100 million and liabilities of between $100 million and $500 million. The filing was under case number 09-13560. For more information contact the court at 302-252-8560.

Central Industries Inc., Houston, Tx., filed Chapter 11 in the U.S. Bankruptcy Court in Delaware. The firm listed assets and liabilities of between $500 million and $1 billion. The filing was under case number 09-13573. For more information contact the court at 302-252-2560.

Salty Disposal Wells LP, Houston, Tx., filed Chapter 11 in the U.S. Bankruptcy Court in Delaware. The firm listed assets and liabilities of between $500 million and $1 billion each. The filing was under case number 09-13564. Also filing was Salty’s Manufacturing Ltd. under case number 09-13563.  For more information contact the court at 302-252-2560.

Lehman Brothers Holdings Inc. reported that, since its collapse into bankruptcy just over a year ago, it has shelled out more than $400 million in payments to lawyers and financial advisers.

Stallion Oilfield Services Ltd., Houston, Tx., filed Chapter 11 in the U.S. Bankruptcy Court in Delaware. The firm listed assets and liabilities of between $500 million and $1 billion each. The filing was under case number 09-13562. Also filing were Stallion Acquisitions LLC, Stallion Production Services LP, Stallion Rockies Ltd, and ten other affiliates. For more information contact the court at 302-252-2560. Stallion and its affiliates reached agreement with a group of its lenders and noteholders that would eliminate more than $525 million in debt and interest.