Morrison & Foerster Secures Summary Judgment for UPS

On March 29, 2022, the U.S. Bankruptcy Court for the Eastern District of Virginia granted summary judgment to Morrison & Foerster client UPS Supply Chain Solutions, Inc. (UPS) while denying TRU Creditor Litigation Trust (Trust)’s motion for summary judgment. 

The Trust asserted a preference claim of more than $12 million, plus interest and costs as part of the ongoing litigation from the Toys “R” Us bankruptcy. UPS argued that the preference action could not be maintained because avoidance actions against all non-insider creditors were released under a settlement agreement among the Toys “R” Us debtors and certain creditors as well as by the chapter 11 plan in the Toys “R” Us bankruptcy. 

Siding with UPS, the court noted that UPS “clearly meets” prepetition creditor and postpetition creditor criteria as it was owed money by the debtors at the time of the bankruptcy filings and extended credit to the debtors during the pendency of the bankruptcy. Therefore, the court found that UPS was a “creditor” entitled to the release under the plain language of the settlement agreement and the chapter 11 plan.

The Morrison & Foerster team advising UPS was led by Jennifer Marines with Theresa Foudy, Natalie Fleming Nolen, Raff Ferraioli, and Robin Smith.