Spencer Fane attorney Megan Clontz recently authored an article published in the American Bankruptcy Institute’s Business Reorganization Committee Articles and Announcement section discussing “Recent Interpretations of ‘Reasonable Due Diligence’ Under Section 547(b).”
In her article, Megan analyzes how several courts have examined the new language in the Bankruptcy Code and the potential shift in the burdens of proof in preference cases.
“As case law continues to develop, trustees and counsel should look to these post-SBRA cases for best practices to minimize opportunities for claim dismissal, including updating preference-related forms and pleadings, reviewing and/or requesting information on potential affirmative defenses from transferees, and reciting due diligence efforts as a component of a § 547(b) claim,” Megan wrote. “Likewise, counsel for preference defendants should pay special attention to whether the new ‘reasonable due diligence’ standard has been met when evaluating complaints and potential defenses to preference litigation.”
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