Lanik v. Smith (Adv. Pro. 15-02023)

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Trustee moved for summary judgment on a preference action.  Defendant argued against summary judgment for three main reasons: (1) the Trustee had failed to prove that the Debtor was insolvent at the time of the alleged payments as required by 11 U.S.C. §547(b)(3); (2) the payments were made in the ordinary course of business and could not be avoided pursuant to 11 U.S.C. §547(c)(2); and (3) the loans made by the Defendant during the preference period constituted "new value" which barred any preference recovery pursuant to 11 U.S.C. §547(c)(4).  The Court entered partial summary judgment for the Plaintiff ruling that: (1) the Trustee had failed to provide evidence proving that the Debtor was insolvent at the time of the transfers; (2) the payments were not in the ordinary course of business and the ordinary course of business defense could not be met; and (3) the loans made by the Defendant during the preference period to the Debtor constituted new value which would be a partial defense, reducing any preference amounts by the amounts loaned.  

Date: 
Tuesday, August 9, 2016
Published: 
Yes
Index Heading: 
Preferences