Another day, another lawsuit. The company behind Ultimate Electronics, a bankrupt chain of consumer electronics, has lodged a complaint against Apple, seeking a payment of at least US$420,104 in return for financial transfers, reports “AppleInsider” (http://www.appleinsider.com).
Ultimate Electronics filed for Chapter 11 bankruptcy in January. Now Ultimate Acquisition Partners, the group behind the retailer, has filed suit against Apple in U.S. Bankruptcy Court in the District of Delaware. Ultimate Acquisition Partners and its chapter 7 bankruptcy trustee, Alfred T. Giuliano, believe they are entitled to more than US$420,000 from Apple, notes “AppleInsider.”
The suit bases that claim on what are known as “preferential transfers.” A preferential transfer — also referred to as a “preference” — is a transfer made prior to a bankruptcy filing to a creditor by a debtor to the exclusion or detriment of its other creditors.
Under Section 547 of the Bankruptcy Code, a trustee in bankruptcy may sue a party who received a payment (or other interest of a debtor in property) from a debtor where: (1) the transfer was made within 90-days of the bankruptcy filing (or 1 year where a payment is made to an “insider”); (2) the transfer was to or for the benefit of the recipient; (3) the transfer was on account of an antecedent debt owed before the transfer; (4) the transfer was made while the debtor was insolvent; and (5) the transfer enabled the creditor to receive more than it would have under a Chapter 7 bankruptcy case, if the transfer had not been made and if that creditor received payment of that debt to the extent it would be paid under the Bankruptcy Code.
The filing claims Ultimate Electronics, which bought products from Apple to resell, transferred $420,104 in property to Apple, which the Cupertino, Calif., company benefitted from, notes “AppleInsider.”
— Dennis Sellers