Alan N. Resnick, Benjamin Weintraub Distinguished Professor of Bankruptcy Law, along with Brad Eric Scheler, Hofstra Law ’77, published the following New York Law Journal article.
Coercive Creditor Treated As Insider in Bankruptcy Case
By Brad Eric Scheler and Alan N. Resnick
New York Law Journal
June 23, 2009
Ordinarily, a debtor in possession or a trustee may recover preferential transfers made by a debtor to its creditors within 90 days before the date of the filing of a petition for relief under the Bankruptcy Code, unless the recipient creditor is an “insider,” in which case the Code authorizes the recovery of such transfers if made within one year before the filing of the bankruptcy petition.1 In Schubert v. Lucent Technologies Inc. (In re Winstar Communications Inc.),2 the U.S. Court of Appeals for the Third Circuit, in a case of first impression, held that when the relationship between a debtor and a creditor is sufficiently close to suggest that transactions were not conducted at arm’s length, the creditor may be considered a “non-statutory insider” for purposes of applying the one-year period for recovery of preferential transfers.