Trustee Dismisses Preference Claim Based on Ordinariness Shown In the Alleged Transfers

The Debtor was a provider of communications services, content, and analytics solutions through multiple communication channels, including print, electronic, and internet-based communications, to clients in the healthcare, financial services, manufacturing, retail, and transportation industries. Defendant, our client is a provider of IT services for government, education, healthcare, and rural electric cooperatives.

After the Debtors filed for bankruptcy, Plaintiff bought an action against the Defendant for $43,510.04, alleging that the transfers were preferential transfers.

Our analysis showed that the transfers were made in the ordinary course of business between the parties. The transfers were in the amount usually paid by the Debtor and were tendered in a manner not different from previous payments. The difference was less than five days when comparing the overall averages between the preference period and the historical period. Several courts view this difference as not so significant as to defeat the ordinariness of the allegedly preferential transfers. The transfers also fell within the range of payments during the historical period.

Moreover, Defendant also provided subsequent new value to the Debtors in the amount of $8,000, which, in the unlikely event that the ordinary course of business defense fails, may be offset against the total claim.

Based on the strength of our defenses, Plaintiff agreed to dismiss the case for no payment.

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