Title

Delaware Court Protects Lenders from Fraudulent Transfer Suit For Payments Made and Collateral Granted on Account of Antecedent Debt
Insolvency and Restructuring Update

Created date

12/14/2010

In an important recent decision, In re Champion Enterprises Inc., the U.S. Bankruptcy Court for the District of Delaware held that payments made and collateral granted on account of valid third-party antecedent debt, while potentially preferential, are per se not a fraudulent transfers. Prior to the Champion decision, courts outside of the Southern District of New York had nearly uniformly applied a more flexible "facts and circumstances test" to such transfers.