Trustee Mark Schlant Files Clawback Actions in IFS Filing Systems LLC Bankruptcy
March 5, 2021, Western District of New York – Trustee Mark J. Schlant in the bankruptcy for IFS Filing Systems, LLC (the “Debtor”) commences clawback actions against five defendants to avoid and recover certain preferential transfers that, Debtor made to the creditors during the 90 days period before the filing of the bankruptcy petition.
Specifically, the Trustee sued CI Filing Systems LLC, International Paper Company, Montenegro, Inc., Production Support Services, Inc. for return of transfers worth $ 400,000.00 as preferences. Through its complaint, the Trustee requests the Court to avoid the alleged transfers as preferential under 11 U.S.C. §547, or as unauthorized post-petition transfers according to 11 U.S.C. §547 and preserving the same for the benefit of the estate pursuant to 11 U.S.C. §551, together with interest thereon, pursuant to 11 U.S.C. §550
A preferential transfer focuses on whether a creditor has received a payment that results in that creditor getting better treatment than other creditors in light of the bankruptcy. A payment is considered a preference if it meets five criteria: the alleged payment is made to a creditor; for a debt owed before the payment being made; while the debtor was insolvent; during either 90 days before the bankruptcy filing for ordinary creditors or one year for insiders of the debtor; which allowed the creditor to receive more than it would have received in distributions from the bankruptcy estate. If a payment is a preference, it must be paid back to the trustee unless a valid defense can be established.