Although there wasn’t ‘good cause’ to excuse late service of a summons and complaint, the bankruptcy court salvaged a large preference by exercising discretion and granting a 10-day expansion of the 90-day deadline.
Because a trustee suing to recover a fraudulent transfer is acting in the interest of creditors, not the debtor, the in pari delicto defense does not apply, says Bankruptcy Judge Scott Clarkson.
The ‘ordinary course’ defense only applies to credit terms with healthy customers, not to debtors in financial distress, even if pressure is ordinary in the industry.
If there’s a constructive trust on property in the debtor’s name, the debtor was only the trustee of the constructive trust and had no legal interest in the property.
