The Bankruptcy Code provides various defenses that a creditor may assert to the recovery of preferential transfers. One such exception is the ordinary course of business exception of 11 USC 547(c)(2). Under section 547(c)(2), a creditor can prevent the disgorgement of assets transferred by the debtor in the "ordinary course of business." This article addresses several points that a trade creditor should keep in mind in its dealings with its debtors to help the creditor either avoid large preference exposure and/or preserve the subjective prong of the ordinary course defense: 1. Be wary of any change in the timing of payments. 2. Be wary of different methods of payments. 3. Be wary of changes in whether payments are made in whole or in part. 4. Be wary of requests to change payment terms...
Debtors made avoidable, preferential transfers of assets when they used certain credit cards to make payments on other credit card accounts shortly before they filed for bankruptcy, the 10th Circuit has ruled in reversing judgment. Less than three months before they filed for Chapter 7 protection, a husband and wife made balance transfers totaling $38,000 from two Capital One credit card accounts to two MBNA credit card accounts. The bankruptcy trustee filed a complaint against MBNA to avoid the payments as preferential transfers under 11 U.S.C. [section]547(b).
As the saying goes, "free advice is worth what you pay for it." That rings particularly true with respect to a plaintiff's counsel's pre-lawsuit letter demanding the return of an alleged preferential transfer, in the context of a federal bankruptcy proceeding or state law assignment for the benefit of creditors (ABC). In a typical demand letter, the plaintiff recites the elements of a preference as set forth in either Section 547(b) of Title 11 U.S.C. (the Bankruptcy Code), or the ABC statute. This article presents a checklist of defenses that rely on legal provisions that are either wholly or partially outside the scope of Sections 547(b) and (c). The checklist include: 1. statute of limitations, 2. jurisdictional defect due to insufficient dollar amount, 3. defendant secured at time o...
... ("debtors") filed for bankruptcy under Chapter 11, years. after they had executed three mortgage dee... See 11. U.S.C. §§ 362(a), 544(a), 547(b). On summary judgment, the. bankruptcy court re...
...Such claims arise under section 547 of the Bankruptcy Code, and can result in a credit... 11 U.S.C. § 547(b)(4)(A). The Bankruptcy Code also p...
...Seeking to exercise his power under 547(b) of the Bankruptcy Code - which permits a truste... for relief from its creditors under Chapter 11 of the Bankruptcy Code, 11 U.S.C. 1101 et seq. (19...
...United States, No. 11-597, the Supreme Court granted certiorari to decid...§ 547(b) and (2) whether criminal restitution is "to or ...
... deficiency judgments in foreclosure actions, (11) limits or bans on garnishment of wages, and exemp.... (21.) 11 U.S.C. [section] 547; Wells Fargo Mortg. v. Lindquist, 592 F.3d 838 (8t...
... action to recover payments made by a chapter 11 debtor to defendant-appellee Transamerica Commerci...§§ 547(b). We agree with the bankruptcy court and the dis...
INTRODUCTION I. CHAPTER 11 SUPERPRIORITIES FOR DERIVATIVES AND REPOS A. The C... via the preference recovery rules, [section] 547 and [section] 550. These transfers were conceptual...
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