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Showing 3 posts in Setoff and Recoupment.

Tribal Sovereign Immunity Bars Preference Claims Against Casinos Subject to Recoupment Rights

Casino Caribbean, LLC v. Money Ctrs. of Am., Inc. (In re Money Ctrs. of Am., Inc.), Adv. Nos. 14-50437 (CSS), 16-50410 (CSS), 2017 WL 775780 (Bankr. D. Del. Feb. 28, 2017)

In this Opinion, the Delaware Bankruptcy Court addressed for the first time whether tribal sovereign immunity bars preference actions against casinos operated by (or on behalf of) Indian tribes.  After considering split authority from other jurisdictions, the Court ruled that it does, although the right to use preference liability defensively in support of a recoupment claim may still be preserved. Read More ›

Set Off of Administrative Claim Against Preference Liability is Permissible and Not a “Disguised New Value Defense”

Official Comm. of Unsecured Creditors of Quantum Foods, LLC v. Tyson Foods, Inc. (In re Quantum Foods, LLC), No. 15-50254 (KJC), 2016 WL 4011727 (Bankr. D. Del. July 25, 2016)

In this Opinion, the Delaware Bankruptcy Court addressed a question that remained in the wake of the Third Circuit’s Opinion in Friedman’s: although post-petition goods and services may not be counted as subsequent new value under section 547(c)(4) of the Bankruptcy Code, may they still be used to offset alleged preference liability?  See Friedman’s Liquidating Tr. v. Roth Staffing Co., LP (In re Friedman’s Inc.), 738 F.3d 547 (3d Cir. 2013).  In answering this question of first impression, the Court ruled that they may.  In its holding, the Court also confirmed earlier rulings that section 502(d) may not be used to disallow administrative claims. Read More ›

Bankruptcy Court Holds That Debtors May Use Their Setoff or Recoupment Rights (Whether Pre- or Post-Petition) to Reduce, At Their Election, A Creditor’s Secured, Administrative, or General Unsecured Claims

In re ADI Liquidation, Inc., (f/k/a AWI Delaware, Inc.), No. 14-12092 (KJC) (Bankr. D. Del. May 5, 2015)

In this Memorandum, Judge Carey answered an important legal question in the affirmative: whether a debtor can use its setoff or recoupment rights (whether pre- or post-petition) to reduce—at its election—the amount of a creditor’s allowed secured, administrative, or general unsecured claim.  In other words, a debtor may choose to apply a receivable against a creditor’s allowed administrative claim, which is entitled to full payment under a plan, and to preserve the creditor’s general unsecured claim, which may only receive partial payment under a plan. Read More ›