After emerging from Chapter 11 bankruptcy, Payless ShoeSource is taking Martha Stewart Living Omnimedia Inc. to court.
In an attempt to reclaim a $1 million payment it made to Martha Stewart Living prior to filing for Chapter 11 protection in February 2019, Payless filed a complaint against the brand on June 19 in U.S. Bankruptcy Court for the Eastern District of Missouri. According to the complaint, Payless subsidiary Payless Finance Inc. transferred $1 million to Martha Stewart Living in January 2019 — one month before it went bankrupt. The funds were for royalties under an agreement dating back to July 2018.
Now reorganized following its bankruptcy, Payless is asking the court to order Martha Stewart Living to repay the funds. The retailer claims it was insolvent when the transfer was made, and that Martha Stewart Living is liable to repay the $1 million under section 555 (a) of the Bankruptcy Code, which allows a trustee to recover property transferred pre-petition. Additionally, Payless claims the payment was an “avoidable transfer” under section 547(b) of the Bankruptcy Code.
Read the source article at footwearnews.com
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