Double-Dipping in Delaware: Friedman's, Quantum Foods and Beyond

Based on these facts, litigants may attempt to distinguish both cases as inapposite. [...]from a policy perspective, they may argue that allowing preference defendants the right to claim full new value while also retaining the right to be paid or invoke setoff for a § 503(b)(9) administrative expens...

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Bibliographic Details
Published inAmerican Bankruptcy Institute journal Vol. 35; no. 10; p. 34
Main Author Fischer, Jeremy R
Format Journal Article
LanguageEnglish
Published Alexandria American Bankruptcy Institute 01.10.2016
Subjects
Administrative expenses
Bankruptcy
Bankruptcy laws
Bankruptcy reorganization
Committees
Credit management
Creditors
Defense
Federal court decisions
Federal courts
Food
Legal defense
Liability
Petitions
Refunds
State court decisions
United States > US
Delaware
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Summary:Based on these facts, litigants may attempt to distinguish both cases as inapposite. [...]from a policy perspective, they may argue that allowing preference defendants the right to claim full new value while also retaining the right to be paid or invoke setoff for a § 503(b)(9) administrative expense based on the exact same pre-petition transactions presents a most egregious example of double-dipping at the expense of the estate and its creditors. A close reading of the decision supports the proposition that, by continuing to do business with a troubled company, a vendor provides independent consideration beyond the mere value of the goods that justifies double-dipping.22 It is difficult - if not impossible - to imagine how this analysis would be differ18 ent merely because the new value took the form of goods delivered within 20 days of a bankruptcy filing. [...]while there are few cases that consider double-dipping in the context of § 503(b)(9), the slate is not completely blank.23 The cases rejecting doubledipping in the § 503(b)(9) context rely on the same policy considerations previously rejected by the Third Circuit, and the Friedman's decision cites one such case unfavorably.24 Conversely, the Friedman's decision cites and relies on the analysis of a case allowing § 503(b)(9) double-dipping.25 Conclusion Taken together and to their logical conclusion, the decisions in Friedman 's and Quantum Foods may provide preference defendants the rare opportunity to lawfully double-dip.
ISSN:1931-7522