Poniatowski Leding Parikh Supports The Preference Reform Legislation In Bankruptcy Matters Proposed By The Commercial Law League Of America

Corporate Attorney Client MeetingBay Area Commercial Attorney’s Position

The principals of PLP support the Creditor’s Rights Section of the Commercial Law League of America’s (CLLA) efforts to reform preference litigation, and agree with CLLA’s efforts to reform preference legislation, and CLLA’s position that preference reform is necessary to even the playing field between creditors and trustees.

In our opinion, all too often preference claims amount to a “shakedown” by trustees, who use out-of-state venue and litigation costs as leverage to compel innocent creditors to settle for business reasons rather than incur the excessive cost of litigating legitimate defenses. In particular, we agree with the reforms to Bankruptcy Code Section 547 recommended by CLLA requiring that the trustee meet and confer with the creditor and provide certain information as a condition precedent to filing an adversary proceeding to recover an alleged preferential transfer.

While many trustees engage in negotiations prior to filing the preference action, establishing an affirmative good faith meet and confer requirement on trustees to provide financial information to the creditor relevant to the claim and possible defenses creates a more even handed approach and reduces the uneven bargaining power enjoyed by trustees. This requirement will not prejudice the trustee’s right to recovery in cases where the creditor has no legitimate defense. We understand that CLLA representatives have met with members of the House and Senate to discuss preference reform and we support their efforts.

East Bay Creditors Bankruptcy Attorney

Poniatowski Leding Parikh Law Corp., with offices in Oakland, Castro Valley, and Pleasanton, has been a member of the Creditor’s Rights Section of the Commercial Law League of America (CLLA) for over 25 years. The firm has over 50 years of combined experience representing commercial creditors in collections and bankruptcy matters, including preference defense litigation. If you need a seasoned commercial collections attorney, please contact us at (510) 881-8700 to schedule a consultation.