Legal Memorandum: Bankruptcy Adversary Proceedings in MN

Issue: What affirmative defenses may be raised by a defendant in bankruptcy adversary proceedings in Minnesota?

Area of Law: Bankruptcy & Creditors Rights
Keywords: Adversary proceedings; Bankruptcy; Affirmative defenses
Jurisdiction: Federal, Minnesota
Cited Cases: 802 F.2d 12; 48 F.3d 623; 403 F.3d 43
Cited Statutes: Fed. R. Bankr. P. 7008; Rule 8 of the Federal Rules of Civil Procedure; 11 U.S.C. § 547; 11 U.S.C. § 545; 11 U.S.C. § 547(c); 11 U.S.C. § 547(b); 11 U.S.C. § 548(a)(1); 11 U.S.C. § 546(a); N.Y. Debt. & Cred. Law § 278(1); 11 U.S.C. § 547(c)(2); Bankruptcy Code, in § 548(c); N.Y. Debt. & Cred. Law § 272 et seq
Date: 01/01/2012

Bankruptcy Rule 7008 incorporates Rule 8 of the Federal Rules of Civil Procedure’s requirements for pleading defenses.  See Jonathan P. Friedland, Commercial Bankruptcy Litigation § 2:6 (2011).  Thus, as with federal civil practice in general, a defendant in an adversary proceeding must raise all affirmative defenses in its responsive pleading.  Id. (citing Fed. R. Civ. P. 8(c)(1), made applicable in adversary proceedings through Fed. R. Bankr. P. 7008).  Rule 8(c)(1) contains a nonexclusive list of such defenses.*FN1  In addition, a party must raise in its responsive pleading the defenses of lack of personal jurisdiction, improper venue, insufficient process, and insufficient service of process, or those defenses will be waived.  Friedland, supra, Commercial Bankruptcy Litigation § 2:6 (citing Fed. R. Civ. P. 12(h)(1), made applicable in adversary proceedings through Fed. R. Bankr. P. 7012).

In addition to showing that one of the necessary elements for a prima facie case does not exist, a number of specific defenses may be raised to defeat an action to avoid a preferential transfer pursuant to 11 U.S.C. § 547.  An action to avoid a preferential transfer may be defended on the ground that:

(1) the transfer was a substantially contemporaneous exchange for new value;

(2) the transfer was a payment in the ordinary course of the business or financial affairs of the debtor and the transferee;

(3) the transfer created a purchase money security interest in property acquired by […]

Subscribe to Litigation Pathfinder

To get the full-text of this Legal Memorandum ... and more!

(Month-to-month and annual subscriptions available)