Before the Debtor went bankrupt, it operated a chain of grocery stores in the Southwest Unites States that focused on freshly prepared and ready-to-eat products. Our client, the Defendant in this case, provided smoked salmon to the Debtor.
After the bankruptcy, Plaintiff brought a clawback action against our client for $67,395.35 as alleged preferential and fraudulent transfers. Plaintiff also alleged that some of the transfers were unauthorized post-petition transfers.
Based on our factual analysis, we proved a difference of approximately six days between the overall averages of the preference period and the historical period. With leading precedents, we showed that several courts view this difference as not so significant as to defeat the ordinariness of the transfers. Moreover, most of the allegedly preferential transfers fell within the range of historical payments and are thus non-preferential. Finally, we showed that the Defendant provided $51,721.00 to the Debtor after the first allegedly preferential transfer. This amount may be offset against the total claim in the unlikely event that the ordinary course of business defense fails.
Finally, we showed that the transfers were made in exchange for goods provided by the Defendant and are thus not fraudulent. We also proved that the Defendant did not receive any unauthorized post-petition transfers.
Based on the strength of our arguments, Plaintiff decided to dismiss the case for no payment.