An Introduction to Mediating Bankruptcy Clawback Lawsuits

On December 31, 2019, the Wuhan Municipal Health Commission, China, first reported a cluster of cases that would later be identified as novel coronavirus. The pandemic significantly impacted the global economy, weighing heavily on commercial activity. As a result, 110 public companies filed for bankruptcy in 2020, the highest level in over a decade, with 51 public companies added to the "billion-dollar" bankruptcy club as measured by asset value.

Avoidance and Recovery actions play a significant role in bankruptcy proceedings. These complaints usually allege a preference payment and, in the alternative, a fraudulent conveyance in an attempt to clawback payments the debtor(s) made to creditors prior to the petition date. The purpose is to recover assets for the benefit of the estate so that all unsecured creditors can share equally in the distribution of the estate. Creditors can defend against these claims by either showing that the elements of the causes of action have not been proven or showing that the payments are protected from avoidance by at least one affirmative defense. 

This course, presented by Magdalena Zalewski of The Law Office of Magdalena Zalewski PLLC, will review preference and fraudulent conveyance claims as well as common defenses. Because mediating such matters is highly encouraged, if not mandatory, we will also review the mediation process and discuss how to prepare for, and participate in, a clawback mediation.

Learning Objectives: 

1. Identify the key bankruptcy provisions that address preference and fraudulent conveyance

2. Discuss the common defenses to avoidance and recovery actions

3. Review the mediation process 

4. Prepare for a clawback mediation