Knowledge Center

Monday, October 13, 2014

The Art of the Preference Defense

NACM Oregon Business Credit Journal
October 2014

By Jason M. Torf

"Why are we being sued? We didn't do anything wrong. All we did was get paid!" This is a very common refrain heard from credit departments when faced with a preference demand letter or lawsuit. A preference claim is the ultimate "no fault" cause of action. When you ship goods or provide a service, you expect to be paid. When you do receive payment, you do not expect to have to return it, particularly where no extraordinary collection efforts were involved. Becoming the subject of a preference action can be very frustrating. Applying your defenses mechanically might help, but recognizing that there can be more art than science involved in calculating some preference defenses, some reasonable creativity can go a long way toward reducing or eliminating liability...

To read the full article, click HERE.

Jason M. Torf is a bankruptcy and creditors' rights partner at Horwood Marcus & Berk Chartered. Jason regularly represents clients in helping them solve their problems with troubled customers, both in bankruptcy proceedings and otherwise. Jason represents clients in all aspects of corporate reorganizations, restructurings, workouts, liquidations, foreclosures and bankruptcies, including working with companies who have received a preference demand letter or lawsuit. He is a frequent speaker to various NACM and CFDD groups as well as other credit groups to help them understand practical steps their companies can utilize to maximize their recovery when a customer files bankruptcy. 

 

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