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Home Case Studies Defendant Was Paid For Its Donuts in The Ordinary course, Trustee’s Case Dismissed For No Payment

Defendant Was Paid For Its Donuts in The Ordinary course, Trustee’s Case Dismissed For No Payment

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Debtors operated as the master franchisee for Dunkin’ Donuts retail stores. They operated Dunkin’ Donuts stores across New York, South Carolina, and Nevada. Our client, the Defendant, supplied donuts to the Debtors’ various locations for many years since 2007.

After the Debtors filed for bankruptcy, the Trustee sued the Defendant for the transfers made in the 90-day pre-petition preference period. Trustee alleged that transfers amounting to $369,102.31 received from the Debtors were preferential transfers, and were thus, avoidable.

Based on our analysis and strong precedents, we showed that a difference of less than one day in the overall averages between historical period and preference period payments falls squarely within what a number of courts have found as ordinary. Therefore, the transfers in question are completely immune from the trustee’s avoidance powers.

We also proved that assuming arguendo, if the ordinary course of business defense somehow fails, the Defendant provided subsequent new value which can be set-off against the Trustee’s total claim, and is sufficient to reduce it to $90,314.51.

Based on our strong affirmative defenses, the trustee agreed to dismiss the case for no payment.

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Jones & Associates

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