Case Background

ViewRay, Inc., a developer of MRI-guided radiation therapy technology, filed for Chapter 11 protection in July 2023. When reorganization efforts failed, the case was converted to Chapter 7 in October 2024. A trustee was appointed to oversee liquidation of the estates. As part of that process, the trustee has begun filing adversary proceedings seeking to recover alleged preferential and fraudulent transfers made in the ninety days before the bankruptcy filing.

Preference Litigation: Core Risks

Under 11 U.S.C. § 547, trustees may sue to claw back payments made to creditors shortly before a bankruptcy petition. These claims typically allege that:

1. The debtor was insolvent at the time of the transfers.
2. The transfers were made on account of antecedent debt.
3. The creditor received more than it would have in a Chapter 7 liquidation.

Even routine commercial transactions can be challenged, which makes it critical for creditors to understand their potential defenses.

Delaware Courts and the Defense Landscape

Because the ViewRay case is pending in the District of Delaware, recent decisions from Delaware courts provide important guidance on how defenses may be analyzed.

1. Collection Pressure and the Ordinary Course Defense

In FI Liquidating Trust v. C.H. Robinson Worldwide, Inc., the District Court for the District of Delaware held that evidence of collection pressure, such as shortened terms or withheld shipments, could defeat an ordinary course of business defense even where payments appeared consistent with industry standards.¹

2. Due Diligence as an Element of the Trustee’s Claim

In In re Pinktoe Tarantula Ltd., the Bankruptcy Court for the District of Delaware ruled that the 2019 amendment requiring trustees to consider “reasonable due diligence” is an element of the trustee’s prima facie case, not an affirmative defense.² This creates an opening for creditors to challenge complaints that lack factual allegations showing adequate diligence.

3. Broad Interpretation of the New Value Defense

Delaware courts have also recognized a creditor-friendly approach to the “new value” defense, following the Third Circuit’s endorsement of the “subsequent advance” method, which gives creditors credit for all subsequent value provided rather than applying a narrower net-new analysis.³

These decisions show that Delaware courts expect trustees to meet their burden with well-supported pleadings while also requiring creditors to carefully document and defend their practices.

Practical Considerations for Creditors

• Audit past dealings to demonstrate consistency in payment terms and practices.
• Preserve invoices, purchase orders, shipping logs, and correspondence.
• Consider moving to dismiss or narrow complaints that fail to allege reasonable due diligence.
• Respond promptly to avoid default judgments, as deadlines in bankruptcy litigation are short.

Our Role

At The Law Office of Magdalena Zalewski PLLC, we represent creditors exclusively in bankruptcy litigation. Our focus is on protecting legitimate payments, identifying flaws in trustees’ pleadings, and negotiating efficient, discreet resolutions to minimize disruption.

If your company has been sued or contacted in connection with the ViewRay proceedings, or in any preference action pending in Delaware, we are available to assist with evaluating exposure and developing a defense strategy.

Schedule a confidential consultation today.

Footnotes

¹ FI Liquidating Tr. v. C.H. Robinson Worldwide, Inc., 94 F.4th 190 (D. Del. 2024).

² In re Pinktoe Tarantula Ltd., 649 B.R. 481 (Bankr. D. Del. 2023).

³ In re Friedman’s Inc., 738 F.3d 547 (3d Cir. 2014).