ASA conference call notes re Chimes

Update to this post: My mistake, the call was actually hosted by the American Staffing Association and not the NACCB.

Was on the American Staffing Association conference call regarding the Chimes (we all know that the parent company is Axium International, but I’m going to refer to this as Chimes since this is how we’re affected). The bankruptcy attorney on the call was New York-based Lee Stremba of Troutman Sanders.

Please keep in mind that I am NOT an attorney and you should not take the following as legal advice. The following are my PERSONAL notes from the call and not meant to be taken as commentary or as my employer’s position on the matter. Entienden? Cool.

The letters most staffing firms got are pretty routine, apparently. If you received payments within 90 days of Chimes filing for bankruptcy, you probably got a preference demand letter from Howard Ehrenberg (the trustee).

What I (please read my disclaimers again) take away from this is that just because you received a preference demand letter from the trustee does not automatically expose you to a lawsuit. You have no legal obligation to even respond to it. But it also won’t hurt to write back and say that you’re looking into it.

The trustee has two years to assert preferential claims and sue creditors. We’re six months away from that time limit. No one knows whether Howard Ehnberg intends to sue Chimes’ creditors, only that (according to Stremba) he is a pretty active litigator.

What are your defenses for preferential treatment?
(Stremba emphasizes that while these sound simple, how the courts interpret each one can vary).

Ordinary Course – You can say that the payments you received from Chimes (which the trustee is now attempting to collect back) was received in the “ordinary course of business,” within the agreed credit terms and in a manner and timing customary to normal business practices (eg Chimes had been paying you every month on the 15th like clockwork and the payment you got right before they filed for bankruptcy).

Contemporaneous Exchange - If there is no such history for “ordinary course,” you can say that the payment terms was “immediately upon billing.”

New Value - If the payment somehow was outside “ordinary course” of business you can say that the additional payments were for additional services.

Soooo…now…you got that scary letter, what is Stremba’s advice (again, what I take away…don’t use this as legal advice)? Gather your records. Look at your payment history with Chimes.

Someone at the call asked if they should get collective representation to save money. His advice? What you basically have to do is analyze your own situation. Amounts that are being demanded vary from one firm to another, and payment terms and history also vary. He emphasized that you have to look at your own situation. Bonding together with other firms who may not be in the same boat won’t help you do that.

What if you just do nothing and don’t act on the demand letter? According to Stremba, if you don’t communicate with the trustee, maybe nothing will happen, but you might also get a complaint, which really is the earliest stage of the legal process…and then you can negotiate a settlement.

(From my estimation, it seems it’s not a bad idea to write a letter and say you’re looking into it…).

Here’s Lee Stremba’s information:

Lee Stremba
Troutman Sanders LLP
lee.stremba@troutmansanders.com
212.704.6143