2. Everyone talks about the 90-day preference period, but the trustee can’t always void payments made during that full period.
3. Under Section 547(b) of the Bankruptcy Code the payment must be made while the bankrupt entity was insolvent.
4. Many companies will be insolvent for 90-days before a bankruptcy filing, but it’s not so clear with Voyager.
5. What made Voyager insolvent was the default of the $600M loan to 3ac. That loan did not go into default until June 27. 3ac could have paid the loan in full on that date. It was anyone’s guess as to what the full scope of its assets were at that time.
6. So up until June 27, Voyager’s loan to 3ac could have still been an asset on Voyager’s balance sheet, meaning that it might not have been insolvent so long as its deposits were more than its other liabilities.
7. It’s possible then that any withdrawal made before June 27 is not able to be clawed back.
8. I understand though that there is a presumption that the bankrupt entity was insolvent during the full 90-day period, and the creditor has burden to prove that the entity was not insolvent at the time the payment was made.
9. So the bankruptcy trustee may play hardball here and still seek recovery and force withdrawers to litigate this issue. Hopefully bankruptcy trustees can be sanctioned for bringing unreasonable claims.
10. I am also hoping that there is some procedure that allows those who deposited and withdrew relatively small amounts to defend a claim to void a preference payment, but that also stays those claims until those with more at stake litigate the common issues.
11. Not only am I not a bankruptcy lawyer, I am also not an accountant. Please comment on the ways my analysis above may be wrong.