The President signed legislation on August 23, 2019 modifying
the Bankruptcy Code in several respects. Here are the four biggest
takeaways.
Help for the preference recipient
Almost all businesses have either received a letter from a
bankruptcy trustee or have been sued by the trustee for the
repayment of sums they received from their customer within 90 days
of the customer’s bankruptcy filing. The recipient has
several affirmative defenses to return of these so-called
“preference” payments that may reduce, or even
eliminate, the amount that must be repaid.
In the past, trustees sent demand letters or even sued
recipients without evaluating the affirmative defenses available to
the recipients, a practice that was perfectly legal, albeit very
frustrating. The new legislation amends the preference statute to
require the trustee to perform “reasonable due
diligence” and to take account of the recipient’s
“reasonably knowable affirmative defenses” before
filing
