Home Motion Practice Toys “R” Us Creditor Litigation Trust Seeks Summary Judgment Against Defendant UPS Supply Chain Solutions, Inc. Involving “Preference Claims” over $12.9 Million

Toys “R” Us Creditor Litigation Trust Seeks Summary Judgment Against Defendant UPS Supply Chain Solutions, Inc. Involving “Preference Claims” over $12.9 Million

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July 30, 2021, Eastern District of Virginia – Plaintiff Toys “R” Us Creditor Litigation Trust seeks summary judgment against Defendant UPS Supply Chain Solutions, Inc. under Rule 7056 of the Federal Rules of Bankruptcy Procedure and Rule 56(a) of the Federal Rules of Civil Procedure. The Trust seeks an entry of a judgment declaring that UPS is “not entitled to the benefits of the avoidance claim releases” contained in Section 3.4(b)(5) of a settlement agreement approved by the court or contained in the Debtors’ confirmed plan.

The Trustee alleges that UPS was “paid in full” from the Debtors’ estates on account of its “pre-petition claims” and “received more than $11 million”. Further, UPS also was a “post-petition service provider” to the Debtors and was allegedly “paid in full” on account of all the post-petition services it provided. The Trustee alleges that despite being paid-in-full, UPS seeks to avoid all “preference liability” under section 547 of the Bankruptcy Code by claiming it was a creditor at some point in time and therefore released from the Trust’s “preference claims” to recover $12,196,529.05 in transfers that “UPS received 90 days prior” to the filing of Debtors’ bankruptcy petitions.

The Trustee claims that the releases in the settlement agreement and plan were never intended to apply to the parties, like UPS who were “paid in full” and “suffered no losses”. Thus, the Trustee seeks an order from the Court determining that no avoidance claims (under chapter 5 of the Bankruptcy Code, non-bankruptcy law, or otherwise) prosecuted by the Trust against the Defendant were “waived or released” pursuant to the settlement agreement, the plan, any orders or documents pertaining thereto.

The case is In re Toys “R” Us, Inc., et al, Case No. 3:19-ap-03087 in the United States Bankruptcy Court for Eastern District of Virginia

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