Greenberg Traurig, LLP | gtlaw.com 1 Sixth Annual American College of Bankruptcy Seventh Circuit Education Committee Seminar Session: Exploring the Outer Limits of the Avoiding Powers September 11, 2015 IIT Chicago-Kent College of Law 565 West Adams Street Chicago, IL Moderator: Nancy A.

The Bankruptcy Court for the Southern District of New York recently handed down a decision declining to grant a creditor’s motion to reopen a debtor’s chapter 7 case and vacate a discharge order. Although the legal predicates at issue in that case may not be relevant to all practitioners, the case itself serves as a valuable reminder about “best” practices and provides a number of teachable moments for attorneys of all ages and practice areas.

Background

Have you ever had to press garlic for a recipe? Or put together a Swedish bookshelf, purchased from a Swedish superstore? Yes, you have – and you may have succeeded, so long as you had a garlic press, or the bag of special Swedish tools respectively. But what if you don’t? Yikes.

“Render unto Caesar the things that are Caesar’s, and unto [CEC] the things that are [CEC’s] [?]” – Matthew 22:21 (as revised)

Former Pittsburgh Steeler wide receiver (and longtime Cleveland Browns nemesis) Lynn Swann may be on the receiving end of a big break. If not, he stands to lose millions of dollars.

All too often, after a debtor receives his or her discharge in bankruptcy and after the case has been closed, a creditor whose debt has been discharged does something which may appear to constitute an effort to collect that debt.  This may range from the sending of an informational account statement by the mortgagee on a home surrendered in the bankruptcy, filing a proof of claim in a subsequent bankruptcy case, to filing of a lawsuit to collect the discharged debt.

Payments made by a debtor within 90 days of a bankruptcy petition are generally avoidable as preferences under section 547 of the Bankruptcy Code.  Many exceptions and defenses exist, however, to ensure that creditors are not discouraged from conducting business with companies that may be at risk of filing

When your company receives notice from a customer that the customer has filed for bankruptcy protection, what do you do? What should you do? First, DO NOT ignore it. The bankruptcy most likely will not go away. Instead, take these five steps to ensure you do not end up sideways in the bankruptcy.

1. Notify your Accounts Receivable Department not to send further collection notices or seek to collect the debt.

In Jubber v. SMC Electrical Products, Inc. et al. (In re C.W. Mining Co.), Case No. 13-4175 (Aug. 10, 2015), the Tenth Circuit Court of Appeals confirmed that a single payment made by a debtor within the 90-day preference period to a seller, with whom the debtor had never done business, may satisfy the elements to be a payment in the “ordinary course” and, thus, not subject to a preference claim by the trustee.

The Trustee for the Liquidation of MF Global Inc. – the defunct futures commission merchant that filed for bankruptcy in October 2011 – received approval from the US Bankruptcy Court overseeing its dissolution to make a final, cumulative 95 percent distribution on all allowed general unsecured creditor claims.