Legal Question in Bankruptcy in Pennsylvania

We had a company file bankruptcy that owed us money, 2 years later the court asked for any money received 90 days previous to be returned. We have a current opportunity to buy a companies inventory. If we buy an inventory and there is a bankruptcy, can anyone come back on us for the inventory?

Asked on 11/04/13, 6:53 pm

2 Answers from Attorneys

You are mixing apples and oranges here. Whenever anyone files bankruptcy, be it an individual or company, any payments in the 90 day period prior to the bankruptcy can be requested to come back to the bankrupt debtor's estate as a preferential transfer. The trustees don't always seek a return but it depends on the circumstances.

That has nothing to do with an asset purchase from a company. If you buy a company's assets or inventory (and you need to do your due diligence here) you hire a business law attorney to draft an asset purchase agreement and you make it clear in that agreement that you are only buying assets from the company not any other legal problems.

When you enter into the agreement, there is usually a contemporaneous transfer - you pay money and you get stuff in return. If the company files bankruptcy, then its their problem - this would not be a type of preferential transfer like the kind you experienced before. You need to do your due diligence though to make sure that everything is up and up and ok so that you don't have reason to know of anything fishy with the company such that knowledge of their dealings can be attributed to you. If the due diligence checks out, then you buy the assets, but not otherwise. Investing the time and money in the due diligence and lawyer will spare you any potential more expensive problems later.

Read more
Answered on 11/04/13, 8:29 pm

Bruce McCullough Bodell Bove', LLC

I agree with the prior answer--you are talking about two different issues. The preference complaint was filed based on you getting paid in the last 90 days before the bankruptcy. Your potentially _paying_ for assets is a different, unrelated situation.

If you need assistance in evaluating/defending the preference action, feel free to contact me. I practice in both Delaware and Pennsylvania.

Read more
Answered on 11/05/13, 6:12 am

Related Questions & Answers

More Bankruptcy Law questions and answers in Pennsylvania