The Committee of Unsecured Creditors appointed in the bankruptcy case of Trainor Glass has begun to settle a few of its recently filed preferential payment claims to obtain funds paid to a number of industry companies and others in the 90 days before Trainor filed for Chapter 11 last March.
Among these, the committee has reached a settlement with Dorma Glass Inc. by which Dorma will return $8,500 to the Trainor estate, according to court documents; the committee had alleged that the company owed it $18,705.37.
Mapes Industry Inc. has agreed to a settlement of $15,026.40, according to court documents; the committee had originally made a claim against the company of $16,736.
Technical Glass Products has agreed to a settlement agreement by which it will return $10,000 to the estate, compared with the $63,209.39 claim made against it by the committee.
Under the terms of the settlement agreements, “the Committee shall be deemed to have released, waived and discharged the transferee[s] from any and all liabilities, obligations, actions, suits, judgments, claims, causes of action and demands, known or unknown, whatsoever at law or in equity arising from, in connection with or related to the avoidance claims respecting the transfers and the complaint.”
“The transferee[s] shall further be deemed to have released, waived and discharged any right of indemnification or recoupment against any third party for the settlement sum or any releases related to this settlement agreement,” write attorneys for the committee in the settlement agreements.
The committee had alleged that during the 90-day period preceding the petition date, between December 10, 2011, and March 9, 2012, Trainor had “continued to operate its business affairs, including the transfer of property, either by checks, cashier checks, wire transfers, direct deposit, or otherwise to certain entities …”
The companies against whom the preferential payment claims were filed were considered debtors to Trainor during this time period and “each preferential transfer constituted a transfer of interest of the debtor in property,” according to court documents.
“Each preferential transfer was made to or for the benefit of the defendant, within the meaning of § 547(b)(1) of the Bankruptcy Code, because each preferential transfer either reduced or fully satisfied a debt then owed by the debtor to the defendant,” wrote the committee in its numerous preferential payment complaints, filed in April. “Each preferential transfer was made for or on account of an antecedent debt owed by the debtor to the defendant before such transfer was made. The debtor was insolvent throughout the preference period because the sum of its representative debts was greater than the fair value of its respective assets.”
Further, the committee alleged that “each preferential transfer enabled the defendant to receive more than the defendant would have if the [Trainor’s] case was brought under chapter 7 of the Bankruptcy Code; the preferential transfers had not been made; and the defendant had received payment of such debt to the extent provided by the Bankruptcy Code.”
A number of the preferential payment complaint claims remained outstanding as of press time. More than 30 of these were filed against industry-related companies.