K. F. Dairies, Inc.

Representation: Preference Defendant

Bankruptcy – Central District of California

Situation: K.F. Dairies, Inc., formerly known as Knudsen Foods, Inc., was put into an involuntary bankruptcy in California. Prior to the bankruptcy, the debtor had been engaged in dairy and food-related businesses. Among the suppliers to K.F. Dairies was a Bernstein and Bernstein, P.C., client, who was served with a complaint seeking the return of allegedly preferential payments.

The complaint sought to recover $79,000.00, but all parties were aware that another $181,000.00 in payments was still in issue and could have been added to the complaint.

Action: Bernstein and Bernstein, P.C. directed the defense strategy using local counsel in California to reduce the expense to the client. Bernstein and Bernstein, P.C. counseled the client with respect to the various defenses available and, in the answer to the complaint and in discovery, a number of defenses were raised.

As a result of the defenses and challenges, the matter was able to be settled for $3,000.00, an amount considered to be less than the anticipated costs of defending the matter through trial.