Chapter 2 GENERAL OBSERVATIONS

• Jurisdiction: United States

Chapter 2 GENERAL OBSERVATIONS

Defending preference cases is challenging and frustrating for a creditor. What might be a complete defense in one jurisdiction might not be so clear in another. Knowing the law of the circuits is critical to effective counsel and analysis of risk.

Preservation of the creditor's records, including email, text and other electronic communication, is essential to defending a preference complaint. Preservation at the inception of a bankruptcy proceeding will keep the cost of future litigation down, reducing the need to search for lost records or records maintained on another computer system. As companies and assets are sold or transferred, parties should remain mindful that preference exposure lasts until the statute of limitations has run, typically two years after the debtor's bankruptcy petition has been filed.¹⁶ Thus, buyers of distressed or other assets should consider preference liability as a liability to be...