Case Study: In Re Brooke Corp.

Law360, New York (February 14, 2012, 1:06 PM EST) -- Pursuant to Section 547 of the Bankruptcy Code, payments made within 90 days of a filing are avoidable as preferences, subject to certain defenses. A defense that has been asserted and sometimes accepted is that the recipient was acting as a “conduit” for another party.

In Northern Capital Inc. v. The Stockton National Bank et. al. (In re Brooke Corporation), 458 B.R. 579 (Bkrtcy.D.Kan.,2011) a recent case decided by the United States Bankruptcy Court for the District of Kansas, the court addressed a conduit defense in...
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