On November 30, 2015, the City of Detroit began filing complaints against vendors and service providers seeking to avoid and recover potentially “preferential payments” made by the City of Detroit during the 90 days preceding entry of the Order for Relief in its Chapter 9 bankruptcy case. The Order for Relief was entered on December 5, 2013, and the City must file its claims by December 5, 2015.
Under section 547 of the Bankruptcy Code, the Debtor may, under certain circumstances, recover payments it made to creditors during the 90 days preceding entry of the order for relief. There are, however, defenses available to creditors to defeat preference claims.
If the City of Detroit has sued you, or you believe that you may be subject to suit, you can contact one of the members of our Bankruptcy Services Group, who have extensive experience in defending complex preference cases, with questions or for assistance.