Creditors’ Committee in Haggen Files Preference Actions
Main Case: In re: HH Liquidation, LLC, et al., Bankr. Case No. 15-11874
Judge: Hon. Kevin Gross
Plaintiff: Official Committee of Unsecured Creditors on behalf of the estates of HH Liquidation, LLC, et al.
From September 5, 2017 through September 6, 2017, the Official Committee of Unsecured Creditors (the “Committee”) in the HH Liquidation, LLC, et al., (the “Debtors”) bankruptcy cases (the “Bankruptcy Cases”) commenced a preference drill, filing approximately 125 adversary proceedings pursuant to Sections 547 and 550 of title 11 of the United States Code (the “Bankruptcy Code”). The Committee is only pleading Section 547 preference actions, and not a Section 548 fraudulent conveyance cause of action. A list of the preference actions as of the date of this posting can be found in the link above.
On September 8, 2015 (the “Petition Date”), Haggen Holdings, LLC (now Debtor HH Liquidation, LLC) and five affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code. On September 21, 2015, the Office of the United States Trustee appointed the following unsecured creditors to serve on the Committee: (i) Unified Grocers, Inc., (ii) PepsiCo, Inc., (iii) Starbucks, (iv) Santa Monica Seafood, (v) United Food and Commercial Workers International, (vi) Valassis Communications, Inc./Valassis Direct Mail, Inc., and (vii) Spirit SPE HG 2015-1, LLC, c/o Spirit SPE Manager, LLC.
On August 16th, 2017, the Debtors and the Committee entered into a stipulation (the “Standing Stipulation”) providing the Committee derivative standing to standing to investigate and assert, on behalf of the Debtors’ estates, any and all actual or potential causes of action to avoid a transfer of property or an obligation incurred by the Debtors pursuant to any applicable section of the Bankruptcy Code, including sections 502, 510, 542, 544, 545, and 547–553 of the Bankruptcy Code or under similar or related state or federal statutes and common law, including fraudulent transfer laws [Bankr. D.I. 2912]. The Standing Stipulation was approved by order of the Bankruptcy Court on August 18, 2017 [Bankr. D.I. 2915].
The Committee is seeking to avoid and clawback transfers made by the Debtors to vendors and service providers that occurred during the 90-day period prior to the commencement of the Bankruptcy Cases (the “Preference Period”). The specific dates of the Preference Period are not defined, but can be calculated as transfers occurring from June 10, 2015 through September 7, 2015. Pursuant to Section 546(a) of the Bankruptcy Code, the Committee has until September 8, 2017 to file additional preference actions.
The substance of the Complaints reviewed thus far exhibit some slightly unique characteristics. The Complaints are basic, with the Exhibit A providing the check number, check issue date, check clear date, and check amount. It is not clear if the Exhibit A provides the specific debtor-transferor, instead the Complaints state:
[E]ither or both of Debtors Haggen Operations Holdings, LLC (“Opco”) or Haggen, Inc. made payments to Defendant for goods and/or services provided to the Debtors pursuant to invoices or statements submitted by Defendant to the Debtors, including but not limited to the transactions between the parties identified on Exhibit A attached hereto. Payments by Opco were related to goods or services provided to stores acquired by the Debtors in the Pacific Southwest, while payments by Haggen, Inc. were related to goods or services provided to the Debtors’ Pacific Northwest “legacy” stores.
The Complaints also fail to identify the invoice information reflecting the antecedent debt.
In addition to the above, the Complaints also state the following:
Plaintiff understands that agreements between the Debtors and purchasers of certain store leases and other assets may have included a release of preferential transfer avoidance claims potentially arising out of payments for goods and services purchased by the applicable stores. Plaintiff has been unable to obtain detailed information by which to identify the potentially affected payments and underlying invoices. Thus, while this action includes all transfers to Defendant during the preference period, Plaintiff will work with the Defendant to identify any transactions that may have been released from avoidance as a result of the above-mentioned store lease sales and will amend this complaint or otherwise reach agreement as to a reduced demand, if applicable.
As such, any defendant will want to inquire, or determine independently, as to the status of relevant purchased leases and the impact it might have on the claims of the Complaint and Exhibit A.
Pachulski Stang Ziehl & Jones is prosecuting the preference drill as counsel to the Committee.
Kurtzman Carson Consultants LLC is the claims agent in these Bankruptcy Cases and case information and main case filings can be found at: http://www.kccllc.net/haggen
If your firm has been served a complaint in the Haggen/HH Liquidation, LLC bankruptcy cases, the law firm of Cooch and Taylor, P.A. is dedicated to representing your needs before the Bankruptcy Court in Delaware.
R. Grant Dick IV Esq.
Robert Pedigo, Esq.
Cooch and Taylor, P.A.