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Home Case Studies Standard Deviation Analysis Shows Ordinariness in Alleged Transfers; Preference Claim Fails

Standard Deviation Analysis Shows Ordinariness in Alleged Transfers; Preference Claim Fails

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Debtors were a leading distributor of firearms and related outdoor products. Our client, the Defendant, is a provider of global risk management and security services supporting businesses worldwide, including uniformed security, systems installation, technology solutions, and secure driver services.

After the Debtors’ bankruptcy, the Trustee commenced a clawback action against the Defendant to avoid and recover $77,959.97 as alleged preferential payments.

Our analysis showed that the transfers in question were ordinary, considering the prior history of payments between the parties. We were able to show that payments amounting to $43,887.94 were ordinary according to the standard deviation analysis, and the remaining $55,485.46 fell within the base period range of payments. Thus, the transfers in question are made in the ordinary course of business and thus shielded from the Trustee’s avoidance powers.

We were also able to show that after receipt of the first alleged preferential transfer, Defendant provided new value to the Debtors in the total amount of $36,298.16 in the form of its services. Thus, the former is entitled to set off this amount of subsequent new value against the amount Plaintiff seeks to claw back.

Based on the strength of our defenses against Plaintiff’s preference claim, Plaintiff agreed to dismiss the case for no payment.

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Jones & Associates

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