Main Case: In re: Deb Stores Holding LLC; Bankr. Case No. 14-12676 (KG)

Plaintiff: Deb Shops SDFMC LLC

As anticipated, on July 29, 2015, Debtor Deb Shops SDFMC LLC filed seventy-seven (77) actions pursuant to Section 547 of title 11 of the United States Code (the “Bankruptcy Code”.) This is in addition to the sixteen actions filed by Debtor Deb Shops SDE-Commerce LLC filed on July 26, 2015. Thus, more than one half of the approximately 170 potential avoidance actions contemplated in the Motion for Authority to Settle Classes of Preference Claim Controversies Pursuant to Bankruptcy Rule 9019(b) and to Modify Compromise Procedures (the “Settlement Motion” [Docket No. 988,]) have been filed. As Deb Stores filed for bankruptcy protection on December 4, 2014, the Debtors, the Committee, and Abelco, L.L.C. have ample time to file more preference actions in the coming days ahead.

As discussed previously, the substance of the Complaints reviewed is somewhat standard. Plaintiff does assert fraudulent conveyance claims under Section 548, relying solely on the recitation of the statutory language. In some instances, Plaintiff sued both the vendor and the factoring company without clearly identifying to whom the transfers were directed. Similarly, Plaintiff appears unable to identify from which of the Debtors, or Debtors’ accounts, the alleged transfers were made. Instead, Plaintiff relies on a loose association between Debtor Deb Shops SDFMC, LLC and Debtor SDE-Commerce LLC, the alleged transfers, and the Debtors’ records regarding intercompany receivables. It is not clear to what extent that the Debtors have the records to support their cases. The Settlement Motion suggests that the Debtors’ books and records might be an issue.

Epiq Systems is the claims agent for Deb Stores Holding LLC. General case information, including an unofficial case docket, can be found at: https://dm.epiq11.com/DBS(link is external)

Official case and adversary dockets can be accessed through the United States Bankruptcy Court for the District of Delaware website: http://www.deb.uscourts.gov(link is external)

R. Grant Dick IV

(302) 984-3867

gdick@coochtaylor.com