The Debtors are manufacturers of automotive acoustical services including reclaimed cotton acoustical insulation, polypropylene splash shields and fender insulators, and resin-free mouldable acoustical insulators.
The Defendant, our client, is a company based in Foxborough, Massachusetts, and is engaged in the business of providing IT support services. The Defendant and the Debtors shared a business relationship of about two (2) years. Specifically, the Defendant provided computer network support services to the Debtors for use in its corporate headquarters. The services included computer remote monitoring, remote IT remediation and remote support services to the Debtors for equipment located at their corporate headquarters. The Defendant and the Debtors conducted business pursuant to a written agreement between the parties.
The plaintiff sought to avoid and recover the amount of $39,722.55 from our client. The alleged transfers were made by way of four checks during the 90 days before the Debtor’s petition date.
Upon review, we showed that the consistency of transactions between the Defendant and the Debtors revealed that there was nothing unusual in their transactions during the preference period when compared with the transactions during one year prior to the preference period. In our position statement, we showed that the transactions were made in ordinary course of business between the parties. Based on our analysis, we found that the Debtors’ average invoice-to-check deposit date average was 117.78 days during the base period and was 115.86 days during the preference period. With the help of established precedents, we showed that a difference of approximately two (2) days in the averages of the base period and the preference period payments fell well within what a number of courts have found as ordinary following their own factual analysis. Therefore, the alleged transfers were protected from the plaintiff’s avoidance power under Section 547(c) of the Bankruptcy Code.
Additionally, we also showed that the Plaintiff’s allegations of fraudulent conveyance were without merit because the Defendant did provide reasonably equivalent value in exchange for the alleged transfers. Based on our defenses in the position statement, the plaintiff agreed to dismiss the case for no payment.