SVLG Preserves Client’s Claim in Circuit City Bankruptcy Case

When Circuit City filed its Chapter 11 petition it owed our client, a vendor of digital media products, more than $970,000. After it confirmed its plan of reorganization, Circuit City’s liquidating trustee sued our client for more than $560,000 in alleged preferential transfers.

The SVLG team transformed this double whammy of liability into a huge victory. We persuaded the trustee that he was unlikely to prevail. The litigation, which was filed in the Richmond, Virginia Bankruptcy Court, was settled without our client having to pay a single dollar. The preference action was dismissed; our client was released of all liability; and our client retained more than 95% of its claim. Instead of paying to settle the litigation, our client will receive a substantial distribution. The first installment of the distribution, a substantial cash payment, already has been received. All of this was achieved at minimal cost in just a few months.