Jackson Walker Wins Trial of Preference Action in Bankruptcy Court

March 6, 2014 | Client Results



Jackson Walker achieved a trial victory on behalf of a plan trustee in a preference action in the U.S. Bankruptcy Court for the Western District of Texas.

The case involved the trustee’s pursuit of pre-petition transfers made to the defendant, an out-of-court consulting firm, prior to a Chapter 11 bankruptcy filing.

At trial, the defendant presented the ordinary course of business defense under the Bankruptcy Code, asserting that most of the transfers were within payment terms or otherwise were sufficiently similar with other payments between the parties. The defendant also argued that the trustee did not have standing to pursue some of the transfers because they had not been sufficiently preserved in the confirmed bankruptcy plan.

In its memorandum opinion, the Bankruptcy Court ruled for the trustee on the ordinary course of business defense, agreeing with the trustee that the payments at issue had characteristics that sufficiently distinguished them from other transfers. The Bankruptcy Court also agreed with the trustee that the bankruptcy plan adequately preserved the trustee’s claims under applicable Fifth Circuit law.

The trustee was represented by Marvin Sprouse and Jennifer Wertz. The bench trial was the most recent case Jackson Walker has tried before Bankruptcy Judge Tony Davis in Austin. Attorneys in Jackson Walker’s Bankruptcy practice regularly represent clients throughout Texas and in jurisdictions nationwide.