Trustee Dismisses Clawback Action Based on Ordinary Course Argument
One of the Debtors, with whom the Defendant conducted business, was a full-service licensed distributor of sports and entertainment products. The Defendant, and our client, manufactures and sells collectible action figures.
After the Debtor filed for bankruptcy, the Trustee commenced a clawback action against our client for avoiding $16,932.52 as alleged preferential transfers.
Our analysis and research proved that Debtors made the transfers in question in the ordinary course of business or financial affairs of the parties. We showed that transfers in question fell in the historical range of payments and were tendered in the same form and method as always. With leading precedent, we proved that such transfers have been considered ordinary by various courts.
Based on the strength of our defenses, the Trustee decided to dismiss the case for no payment.
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