Plaintiff Dropped Preference Claims After J&A Successfully Applied The Ordinary Course of Business Defense

The Debtors operated a chain of retail stores throughout the United States, Guam, Puerto Rico, and the U.S. Virgin Islands. The Defendant sold various home consumer products to the Debtors on wholesale, which the Debtors would then resell at retail.

After the Debtors filed for bankruptcy, Plaintiff sought to recover $717,686.95 as alleged preferential transfers.

After a thorough analysis of the parties’ transactions, we established a baseline of dealings to compare payment practices during the 90-days Preference Period before the Petition Date with the prior course of dealings. We proved that the transfers in question fell in the historical range of payments and were made less than five days late on average. In addition, we also showed that the Defendant provided about $235,321 after the first allegedly preferential transfer and should therefore be able to set off this amount from the transfers sought to be recovered.

Upon reviewing the position statement we prepared, Plaintiff decided to dismiss the case for no payment.

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