The City of Detroit recently sued 180 companies and people who may have thought they were special because they had received payments shortly before Detroit filed for Chapter 9 bankruptcy in July 2013.
Unfortunately, those “special” people and companies are now being sued for being “preferred” by the City of Detroit in making payments to them. The lawsuits range from under $100,000 to several million dollars.
The suits were filed the end of November and early December, shortly before the two year window closed to sue for preferences after the order for relief was entered by the bankruptcy court on Dec. 5, 2013. Somewhat ironically, the City of Detroit is “celebrating” the one-year anniversary of its emergence from bankruptcy as “The New Detroit.”
The lawsuits are filed against city vendors, recipients of personal injury judgments and several law firms. While the lawsuits do not appear to have been served yet, there are a number of defenses that can be raised in these lawsuits.
Among the defenses are the new value defense and ordinary course of business defense. In addition, if the payments that the city seeks to recover are part of an executory contract that was assumed by the city, then such payments should not be recoverable as preferences given that the contract was assumed.
For those unfortunate souls who find themselves being treated a bit less special than they had hoped or expected, in the city’s cases or in similar situations, Plunkett Cooney has several bankruptcy experts who can help.
David A. Lerner is a partner in the firm’s Bloomfield Hills office and a member of Plunkett Cooney’s Banking, Bankruptcy & Creditors' Rights Practice Group.
Mr. Lerner has represented banks, other financial institutions ...
Add a comment
SubscribeRSS Plunkett Cooney LinkedIn Page Plunkett Cooney Twitter Page Plunkett Cooney Facebook Page
- Commercial Liability
- Business Risk Management
- Tax Law
- Commercial Real Estate
- Commercial Loans
- Business Torts
- Real Estate Mortgages
- Commercial Leasing
- Fraud Activity
- Cyber Attack
- Risk Management
- Real Estate
- Mortgage Foreclosure
- Internet Law
- Statute of Limitations
- Residential Liability
- Zoning and Planning
- Consumer Protection
- Non-compete Agreements
- Department of Education (DOE)
- Alternative Dispute Resolution (ADR)
- Fair Debt Collection Practices Act
- Fair Credit Reporting Act
- Unfair Competition
- Uniform Commercial Code (UCC)
- Shareholder Liability
- Understanding Your Insurance Coverage
- Michigan Supreme Court to Review State Tax Law Provision Regarding Location of Services Rendered
- Redemption is Redemption is Redemption
- Rules of the Road for Contract Interpretation
- Minority Owner Oppression Claims, an Introduction
- Freedom to Contract Jeopardized When Fact Finder’s ‘Sense of Fairness’ Becomes Determinative
- Failure to Understand Terms of Personal Guarantee Agreements Will Likely Cost You
- Collateral Estoppel may Apply to Vacated Judgments Post-settlement
- “But he hit me First” Might Work With Mom, but not Necessarily for Defending Breach of Contract Claims
- E-Commerce Sales Tax Enforcement Finally Enters 21st Century