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Publish Date: 
Wednesday, October 4, 2017

Main Cases:
In re: APP Winddown, LLC (f/k/a American Apparel, LLC), et al., Bankr. Case No. 15-12055
In re: APP Winddown, LLC (f/k/a American Apparel, LLC), et al., Bankr. Case No. 16-12551

Judge:           Hon. Brendan Linehan Shannon
Plaintiffs:      2015 Case: Peter Kravitz as Litigation Trustee of the AAI Litigation Trust
                       2016 Case: APP Winddown, LLC, et al.


List of Adversary Proceedings

Starting September 29, 2017, Peter Kravitz, as Litigation Trustee (the “Litigation Trustee”) of the AAI Litigation Trust, filed 43 lawsuits (the “2015 Adversary Proceedings”) pursuant to Sections 547 and 550 of title 11 of the United States Code (the “Bankruptcy Code”) in the 2015 American Apparel bankruptcy case (the “2015 American Apparel Case”). Starting October 2, 2017, in addition to the 2015 Adversary Proceedings, debtor APP Winddown, LLC filed 127 lawsuits (the “2016 Adversary Proceedings”) pursuant to Sections 547, 548, 549, and 550 of the Bankruptcy Code in the 2016 American Apparel bankruptcy case (the “2016 American Apparel Case” together with the 2015 American Apparel Case, the “Bankruptcy Cases”)

The 2015 American Apparel Case

On October 5, 2015 (the “2015 Petition Date”), the 2015 Debtors commenced the 2015 American Apparel Case by filing a voluntary petitions in Delaware for relief in this Court under chapter 11 of the Bankruptcy Code. On January 27, 2016, this Court entered an order confirming the First Amended Joint Plan of Reorganization of the Debtors and Debtors in Possession (the “Confirmation Order” and “Plan,” respectively). [2015 Case D.I. 687]. The effective date of the Plan (the “2015 Plan Effective Date”) occurred on February 5, 2016. [2015 Case D.I. 722].

In accordance with the Plan and Confirmation Order, the AAI Litigation Trust (the “2015 Trust”) was established on the 2015 Plan Effective Date, and the Debtors and the Trustee entered into a certain Litigation Trust Agreement. Pursuant to Article III, Section H of the Plan, the “Litigation Trust Assets”, including the “Specified Causes of Action” arising under chapter 5 of the Bankruptcy Code, were transferred to the Trust. [2015 Case D.I. 368].

Pursuant to Article III, Section J of the Plan and Exhibit H to the Plan Supplement, the Debtors’ rights to commence, prosecute, or settle Retained Causes of Action were preserved, including Causes of Action under chapter 5 of the Bankruptcy Code not otherwise transferred to the 2015 Trust as set forth above. [2015 Case D.I. 368, 496]

The 2016 American Apparel Case

Ultimately failing again, on November 14, 2016 (the “2016 Petition Date”), the reorganized American Apparel refiled, commencing a second case (the “2016 American Apparel Case”) in Delaware under chapter 11 of the Bankruptcy Code.

Accordingly, there are actually two sets of avoidance lawsuits currently being litigated before the United States Bankruptcy Court in the District of Delaware. Pursuant to Section 546(a) of the Bankruptcy Code, the Litigation Trustee has until October 5, 2017 to complete the filings under the 2015 American Apparel Case.

The Trustee is seeking to avoid and clawback transfers made by the American Apparel Debtors to vendors, service providers, and other creditors that occurred during the 90-day period prior to the commencement of 2015 American Apparel Case (the “Preference Period”). The Preference Period is defined in the Complaint as the period between July 7, 2015 and October 5, 2015.

The substance of the Complaints is standard ASK fare, with generic pleadings, relying on the Exhibit A for specific transfer information.  Plaintiff’s Exhibit A attempts to identify some or all of the required pleadings information: which Debtor made the transfer, the Debtor incurring the antecedent debt, the check/payment number, clear date, exact amount of the transfer, the invoice number, the invoice amount, and the amount allegedly paid. The direct claims of the 2016 American Apparel Debtors include claims under Section 548 and 549 (Post-Petition Transfers).

ASK LLP is prosecuting this preference drill as counsel to Trustee Kravitz and the Debtors. Blank Rome LLP is serving as Delaware counsel.

Prime Clerk is the claims agent in these 2015 American Apparel Case and case information and main case filings and copies of the complaints can be found at: https://cases.primeclerk.com/AmericanApparel/Home-DocketInfo

            If you have been served a complaint in the American Apparel bankruptcy cases and you require counsel, the attorneys at Cooch and Taylor, P.A. are available to represent your interests before the Bankruptcy Court in Delaware.

R. Grant Dick IV Esq.
Cooch and Taylor, P.A.
(302) 984-3867