Bankruptcy Appeals Court Says Qualia Can Avoid Liens

Law360, New York (January 14, 2011, 5:56 PM EST) -- A federal bankruptcy appeals court affirmed Friday a ruling allowing drug tester Qualia Clinical Services Inc. to recover on security interests transferred to Inova Capital Funding Inc. as part of an invoice purchase agreement, saying the liens constituted preferential transfers.

The district court bankruptcy judge correctly viewed the agreement as a financing agreement and not a true sale, and was right to conclude that Qualia, an Omaha, Neb.-based drug tester, could avoid the liens as preferences, ruled a three-judge panel in the U.S. Bankruptcy Appellate Panel...
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