Jones & Associates prove a strong ordinary course and subsequent new value defense, case dismissed for zero payment
Debtors were in the entertainment and media business based in California. Their portfolio included daily and weekly newspapers, magazines, and other specialty publications. The Orange County register was their flagship publication. Defendant, our client, is a manpower and staffing personnel service company and provided staffing services to one of the Debtors’ various departments.
After the Debtors filed for bankruptcy, the Plaintiff brought an action against our client to avoid and recover $220,108.33 as allegedly preferential payments.
We proved with our analysis that payments made in the 90-day preference period, and the historical period before that were made fairly similarly and were thus ordinary. We cited precedent that shows that payments that fall within a historical range of payments, and are made on an average five days later as compared to prior dealings between the parties are deemed to be in the ordinary course of business.
Lastly, we showed that Defendant provided $223,496.42 worth of subsequent new value to the Debtor shortly before their bankruptcy, and thus, this amount could be set off from the Plaintiff’s claim. Based on our new value defense, even if the ordinariness defense fails, the Plaintiff could no recover more than $58,225.19.
The Plaintiff agreed to dismiss the case for zero payment based on the strength of our position statement.