Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 1 of 10 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: VIOLIN MEMORY, INC., Debtor. CORY S. SINDELAR and SHEON KAROL, as Distribution Trustees of the Violin Memory Distribution Trust, Chapter 11 Case No. 16-12782 (LSS) vs. Plaintiffs, Adv. Pro. No. 17-50951-LSS AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., Defendant. DEFENDANT S ANSWER AND AFFIRMATIVE DEFENSES TO COMPLAINT TO AVOID AND RECOVER TRANSFERS PURSUANT TO 11 U.S.C. 547 AND 550 AND TO DISALLOW CLAIMS PURSUANT TO 11 U.S.C. 502 Defendant American Express Travel Related Services Company, Inc. ( AETRS or Defendant ) submits this Answer and Affirmative Defenses in response to the Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C. 547 and 550 and to Disallow Claims Pursuant to 11 U.S.C. 502 [Docket No. 1] ( Complaint ) in the above-captioned proceeding. ANSWER AETRS answers the individually numbered paragraphs of the Complaint as follows: NATURE OF ACTION 1. Paragraph 1 of the Complaint appears to contain no allegation of fact to which a response by AETRS is required. To the extent a response is required, AETRS denies the
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 2 of 10 allegations set forth in paragraph 1, and specifically denies that the Plaintiff is entitled to the relief referenced therein. 2. Paragraph 2 of the Complaint appears to contain no allegation of fact to which a response by AETRS is required. To the extent a response is required, AETRS denies the allegations set forth in paragraph 2, and specifically denies that the Plaintiff is entitled to the relief referenced in the first sentence of paragraph 2. JURISDICTION AND VENUE 3. AETRS admits the allegations set forth in paragraph 3 of the Complaint. 4. Paragraph 4 of the Complaint appears to contain no allegation of fact to which a response by AETRS is required. To the extent a response is required, AETRS denies that the Plaintiff is entitled to relief under the statutory provisions and rules referenced therein. 5. AETRS admits the allegations set forth in paragraph 5 of the Complaint. To the extent any claim asserted in the Complaint is not a core proceeding under 28 U.S.C. 157(b)(2), AETRS consents to the entry of final judgment and order by the Bankruptcy Court. 6. AETRS admits the allegations set forth in paragraph 6 of the Complaint. 7. Paragraph 7 of the Complaint appears to contain no allegation of fact to which a response by AETRS is required. AETRS also consents to the entry of final orders or judgments by the Bankruptcy Court. PROCEDURAL BACKGROUND 8. In response to paragraph 8 of the Complaint, AETRS states that the record of the Court speaks for itself, and AETRS denies any allegation set forth in paragraph 8 that is 9. In response to paragraph 9 of the Complaint, AETRS states that the record of the 2
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 3 of 10 Court speaks for itself, and AETRS denies any allegation set forth in paragraph 9 that is 10. In response to paragraph 10 of the Complaint, AETRS states that the record of the Court speaks for itself, and AETRS denies any allegation set forth in paragraph 10 that is 11. In response to paragraph 11 of the Complaint, AETRS states that the record of the Court speaks for itself, and AETRS denies any allegation set forth in paragraph 11 that is PARTIES 12. In response to paragraph 12 of the Complaint, AETRS states that the record of the Court speaks for itself, and AETRS denies any allegation set forth in paragraph 12 that is 13. In response to the first sentence of paragraph 13 of the Complaint, AETRS admits that it is a creditor that has transacted business in the United States with the Debtor, and denies the remaining allegations set forth therein. AETRS admits the allegations set forth in the second sentence of paragraph 13. FACTUAL BACKGROUND 14. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 14 of the Complaint. 15. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 15 of the Complaint. 16. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 16 of the Complaint. 3
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 4 of 10 17. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 17 of the Complaint. 18. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 18 of the Complaint. 19. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 19 of the Complaint. 20. In response to the allegations set forth in paragraph 20 of the Complaint, AETRS admits that the Debtor had an account with AETRS governed by a commercial account agreement and for which monthly statements were issued by AETRS, and AETRS states that such records speak for themselves and denies any allegation set forth in paragraph 20 or in Exhibit A to the Complaint that is AETRS lacks knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 20. 21. In response to the allegations set forth in paragraph 21 of the Complaint, AETRS admits that the Debtor had an account with AETRS governed by a commercial account agreement and for which monthly statements were issued by AETRS, and AETRS states that such records speak for themselves and denies any allegation set forth in paragraph 21 that is 22. In response to the allegations set forth in paragraph 22 of the Complaint, AETRS admits that the Debtor had an account with AETRS governed by a commercial account agreement and for which monthly statements were issued by AETRS, and AETRS states that such records speak for themselves and denies any allegation set forth in paragraph 22 or in Exhibit A to the Complaint that is 4
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 5 of 10 23. AETRS denies that Plaintiff is entitled to any relief referenced in paragraph 23 of the Complaint from AETRS. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 23. 24. In response to paragraph 24 of the Complaint, AETRS admits that it received certain of the payments listed in Exhibit A to the Complaint during the Preference Period. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 24. 25. In response to paragraph 25 of the Complaint, AETRS denies that Plaintiff is entitled to any relief referenced therein, including without limitation the reservation of rights alleged in the final sentence of paragraph 25. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 25. CLAIMS FOR RELIEF COUNT I (Avoidance of Preference Period Transfers 11 U.S.C. 547) 26. AETRS incorporates and repeats its responses to paragraphs 1 through 25 above as though set forth fully herein. 27. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 27 of the Complaint. 28. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 28 of the Complaint. 29. In response to the allegations set forth in paragraph 29 of the Complaint, AETRS admits that it was a creditor of the Debtor, and that the Debtor had an account with AETRS governed by a commercial account agreement and for which monthly statements were issued by 5
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 6 of 10 AETRS, and AETRS states that such records speak for themselves and denies any allegation set forth in paragraph 29 or in Exhibit A to the Complaint that is 30. In response to paragraph 30 of the Complaint, AETRS admits that it was a creditor of the Debtor. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 30. 31. AETRS admits that certain of the alleged transfers were made for, or on account of, an antecedent debt or debts owed by the Debtor to AETRS before such transfers were made. AETRS states that the provisions of the Bankruptcy Code speak for themselves, and AETRS denies any allegation set forth in paragraph 31 AETRS further states that the Debtor had an account with AETRS governed by a commercial account agreement and for which monthly statements were issued by AETRS, and AETRS states that such records speak for themselves and denies any allegation set forth in paragraph 31 or in Exhibit A to the Complaint that is 32. In response to paragraph 32 of the Complaint, American Express states that 11 U.S.C. 547(f) speaks for itself, and AETRS denies any allegation set forth in paragraph 32 that is AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 32. 33. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 33 of the Complaint. 34. AETRS denies the allegations set forth in the first sentence of paragraph 34 of the Complaint. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the remaining allegations set forth in paragraph 34. 35. AETRS denies the allegations set forth in paragraph 35 of the Complaint. 6
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 7 of 10 COUNT II (Recovery of Avoided Transfers 11 U.S.C. 550) 36. AETRS incorporates and repeats its responses to paragraphs 1 through 35 above as though set forth fully herein. 37. AETRS denies the allegations set forth in paragraph 37 of the Complaint. 38. AETRS is without knowledge or information at this time sufficient to form a belief as to the truth of the allegations set forth in paragraph 38 of the Complaint. 39. AETRS denies the allegations set forth in paragraph 39 of the Complaint. COUNT III (Disallowance of All Claims 11 U.S.C. 502(d) and (j)) 40. AETRS incorporates and repeats its responses to paragraphs 1 through 39 above as though set forth fully herein. 41. AETRS denies the allegations set forth in paragraph 41 of the Complaint. 42. In response to paragraph 42 of the Complaint, AETRS denies that it has any liability for the Transfers under 11 U.S.C 550 and that it has any obligation to pay the amount of the Transfers or turn over such property, and therefore admits that it has not paid such amount or turned over such property. 43. AETRS denies the allegations set forth in paragraph 43 of the Complaint. 44. AETRS denies the allegations set forth in paragraph 44 of the Complaint. AFFIRMATIVE DEFENSES AETRS asserts its Affirmative Defenses to the Complaint as follows: First Affirmative Defense Plaintiff has failed to allege facts with sufficient specificity that, if proven, establish a 7
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 8 of 10 prima facie case for recovery under 11 U.S.C. 502, 547 and 550, and by this failure has failed to state a claim upon which relief may be granted. Second Affirmative Defense To the extent the Debtor transferred any interest in property to or for the benefit of an alleged transferee during the Preference Period, such transfers were intended by the Debtor and such transferee to be contemporaneous exchanges for new value given to the Debtor, and the transfers were, in fact, substantially contemporaneous exchanges. 11 U.S.C. 547(c)(1). Third Affirmative Defense To the extent the Debtor transferred any interest in property to or for the benefit of an alleged transferee during the Preference Period, such transfers were in payment of a debt incurred by the Debtor in the ordinary course of business or financial affairs of the Debtor and such transferee and either (i) made in the ordinary course of business or financial affairs of the Debtor and such transferee or (ii) made according to ordinary business terms. 11 U.S.C. 547(c)(2). Fourth Affirmative Defense To the extent that the Debtor transferred any interest in property to or for the benefit of an alleged transferee during the Preference Period, such transfers were made for new value given to or for the benefit of the Debtor, not secured by an otherwise unavoidable security interest and on account of which new value the Debtor did not make an otherwise unavoidable transfer to or for the benefit of such transferee. 11 U.S.C. 547(c)(4). Fifth Affirmative Defense To the extent an alleged transferee received the alleged transfers, such transfers were not made while the Debtor was insolvent. 8
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 9 of 10 Sixth Affirmative Defense An alleged transferee is entitled to setoff or recoupment against any claim for any amounts owed to the transferee by the Debtor for unpaid post-petition charges which are entitled to an administrative expense priority under 11 U.S.C. 503. Seventh Affirmative Defense Plaintiff s claims may be barred, in whole or in part, under the applicable statute of limitations. Eighth Affirmative Defense AETRS denies each and every allegation of the Complaint not admitted or otherwise controverted or qualified and further denies that Plaintiff is entitled to any relief whatsoever from AETRS. Ninth Affirmative Defense AETRS reserves the right to assert any affirmative defense available under the Bankruptcy Code, 11 U.S.C. 101, et seq., or other applicable law, as may be discovered during the course of additional discovery and investigation. WHEREFORE, AETRS respectfully requests that the Court enter an order dismissing the Complaint, including each and every claim set forth therein, with prejudice, and denying any of the relief sought in the Complaint, or that judgment be rendered in favor of AETRS and against the Plaintiff with respect to all matters before this Court, and that AETRS be granted such other and further relief as the Court deems just, equitable, and proper. 9
Case 17-50951-LSS Doc 5 Filed 09/20/17 Page 10 of 10 Dated: September 20, 2017 SMITH, KATZENSTEIN & JENKINS LLP /s/ Kathleen M. Miller Kathleen M. Miller (DE No. 2898) 1000 West Street, Suite 1501 P.O. Box 410 Wilmington, DE 19899 (19801 courier) Tel: (302) 652-8400 Fax: (302) 652-8405 kmiller@skjlaw.com and Maureen M. Weaver Arnall Golden Gregory LLP 171 17 th Street NW, Suite 2100 Atlanta, GA 30363 404-873-8716 maureen.weaver@agg.com Attorneys for American Express Travel Related Services Company, Inc. 10