April 13, 2011 Articles

Pointers for Pleading Preferential and Fraudulent Transfer Claims

These cases provide a measure of guidance for practitioners who may be wondering what it takes to satisfy the heightened pleading requirement.

By Una Young Kang

Bankruptcy Courts are still in the early stages of applying the heightened pleading standard first expressed by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and then refined in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), to a variety of claims arising in bankruptcy litigation, but it is possible to make general observations from cases that have assessed the issue in the context of Bankruptcy Code sections 544, 547, and 548. Avoidance actions are particularly susceptible to Twombly/Iqbal challenges to sufficiency of pleading because they are often prepared and filed without the benefit of complete information or the full cooperation of the debtor, and may be filed at the last minute, usually on the eve of the statutory deadline.

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