Ordinary Course and New Value Defenses Lead to Dismissal of Trucking Preference Action for No Payment

A Chapter 11 debtor in a nationwide trucking bankruptcy sued our client, a motor carrier, to recover $103,802.80 in alleged preferential transfers made during the 90 days before the bankruptcy filing. Our client had provided freight transportation services to the debtor’s logistics subsidiary for more than two years.

We developed an ordinary course of business defense under section 547(c)(2) by reconstructing the parties’ payment history from our client’s books and records. An analysis of 211 historical invoices showed an average payment interval of 27.66 days, compared with 27.13 days during the preference period—a difference of approximately half a day. Every challenged payment was made within 21 to 34 days of the invoice date, well within the historical payment range of 14 to 37 days.

We also identified approximately $85,000 in unpaid transportation services provided after the challenged transfers. A transfer-by-transfer analysis established approximately $58,000 in subsequent new value under section 547(c)(4), providing an additional defense to the claim.
Faced with this analysis, the plaintiff agreed to dismiss the action with prejudice. The parties executed the dismissal stipulation one week before the scheduled mediation. Our client paid nothing and retained its proof of claim without waiver.

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