This FAQ section is tailored for sophisticated creditors, institutional clients, and commercial stakeholders seeking high-level legal guidance in bankruptcy and recovery. Each answer is designed to reflect your firm’s niche positioning and establish you as a go-to expert.

For additional definitions, see the Glossary at the end of this document.    
 

Defending Clawback Litigation

• What’s the fastest way to resolve a clawback lawsuit without trial?

We assess the factual and procedural posture on day one. If the trustee’s demand lacks evidence or standing, we may respond with a Rule 12(b)(6) motion, abstention argument, or early mediation strategy. Our goal is to resolve without discovery whenever possible.

• Can I assert multiple defenses at once in a preference or fraudulent transfer case?

Absolutely. Most cases benefit from a layered defense: ordinary course, new value, contemporaneous exchange, and safe harbor arguments often work best when combined.

• What factors increase my exposure to clawback liability?

Risk factors include large payment spikes before bankruptcy, non-standard invoice terms, insider status, or aggressive collections. We evaluate risk profiles and design mitigation strategies tailored to your transaction history.

• How do courts evaluate ‘ordinary course’ defenses?

Courts consider industry standards, historical payment timing, and any deviation during the preference period. We support our position with expert affidavits and internal vendor records.

• Are there early procedural tools to dismiss a clawback claim?

Yes. Rule 12 motions, jurisdictional objections, and improper service defenses can support early dismissal. We also explore waiver, laches, or settlement defenses where applicable.

Maximizing Creditor Recovery

• What qualifies as an administrative expense claim—and how do I get paid faster?

To qualify, goods or services must be post-petition and benefit the estate. We help clients submit fast-track motions that reduce the objection window and increase payout likelihood.

• How can I structure my services to qualify for ‘critical vendor’ treatment?

We advise on contract language, billing protocols, and debtor dependencies to position vendors for inclusion in critical vendor motions or informal payment agreements.

• Is a motion for allowance always necessary for post-petition payments?

Sometimes. We analyze payment timing and estate liquidity to determine if a motion is strategic or whether quiet administrative approval suffices.

• When does a lease qualify for §365 assumption—and how does it benefit me?

A lease can be assumed when beneficial to the debtor’s reorganization. Upon assumption, all defaults must be cured, giving landlords leverage and full payment rights.

• What’s the best way to respond to a §365 rejection notice?

We file a rejection damages claim, preserve use evidence for potential administrative priority, and assess litigation options to maximize recovery.

Bankruptcy Compliance & Exposure Mitigation

• Can I still transact with a customer in bankruptcy—and protect myself?

Yes. With court-approved contracts or COD terms, you can mitigate risk. We negotiate protections like escrow or stipulations before performance.

• What due diligence should I perform before accepting payments from a bankrupt debtor?

Review plan status, bar dates, court orders, and payment sources. We provide payment vetting protocols for credit teams.

• How do I minimize clawback risk going forward?

Maintain standard payment intervals, enforce aging policies, and document delivery. We offer audit services to reduce future risk.

• Can I revise my contract terms to protect future payments?

Yes. We recommend conditional delivery clauses, reduced payment windows, and dispute timing protocols to harden clawback defenses.

Strategic Motions & Litigation Tools

• Should I file a motion for relief from the automatic stay—or wait?

We evaluate risk of asset loss, delay, and secured creditor position. Early motion practice is often favored when collateral is at risk.

• Can I oppose a debtor’s plan or critical vendor motion if it harms my interests?

Yes. Objections can lead to renegotiation or improved treatment. We prepare targeted objections or propose plan amendments.

• How can I leverage a Rule 2004 exam to strengthen my position?

Rule 2004 allows deep discovery into the debtor’s finances, transactions, and insider behavior. We use it to gather clawback evidence or assess solvency.

• What are my options if I missed a bar date or plan objection deadline?

We can seek relief under FRBP 9006(b) or negotiate informal reinstatement. Our approach depends on case timing and opposing counsel posture.

Positioning for Long-Term Creditor Advantage

• Can I negotiate plan terms as an unsecured creditor?

Yes. Through informal creditor groups or formal objections, we negotiate enhanced recovery terms and protect vendor interests.

• How should I respond to a preference demand letter?

Avoid responding directly. We prepare strategic responses with layered defenses, document analysis, and settlement positioning.

• Is it worth filing an adversary complaint as a creditor?

In select cases—such as fraud, fiduciary misconduct, or lien enforcement—it can be a valuable tool. We evaluate cost-benefit and tactical impact.

• How does bankruptcy litigation differ from traditional commercial disputes?

Shorter timelines, unique evidentiary burdens, and extensive motion practice. We tailor each case for speed, leverage, and dismissal opportunities.

• Should I participate in mediation if offered by the bankruptcy court?

Often yes. Courts favor resolution, and strategic mediation can limit legal spend while protecting rights. We structure strong pre-mediation briefs.    
 

Glossary of Bankruptcy Terms

• Automatic Stay

An injunction that halts actions by creditors to collect debts once a bankruptcy petition is filed.

• Clawback

A lawsuit seeking the return of payments made by the debtor before bankruptcy, typically under Sections 547 or 548.

• Administrative Claim

A priority claim for post-petition goods or services that benefit the bankruptcy estate.

• Rule 2004 Exam

A powerful discovery tool in bankruptcy allowing broad examination of financial documents or parties.

• Proof of Claim

A formal filing by a creditor stating the amount owed by the debtor as of the bankruptcy filing date.