The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

Christians v. Miller Waste Systems, Inc., (In re Victor Plastics, Inc.), ADV 09-4178 (Bankr. D. Minn. 3/8/10) (O’Brien, J.).

Case Summary:

Payment in The Ordinary Course of Business is Not Avoidable

The bankruptcy court granted partial summary judgment to the defendant in a preference action by the trustee. The trustee challenged approximately $181,000 of payments made by the debtor to the defendant during the pre-bankruptcy preference payment. On the defendant’s motion for summary judgment, the court found that payments by check for approximately $169,000 were for debts incurred by the debtor in the ordinary course of business, and were received by the defendant in the ordinary course pursuant to 11 U.S.C. § 547(c)(1)(A). Although the checks were not timely paid, the timeliness of payment did not significantly differ during the preference period from the parties’ payment history outside the period. See Lovett v. St. Johnsbury Trucking, 931 F.2d 494, 497 (8th Cir. 1991).

However, the court found that one payment, a wire transfer, was not in the ordinary course. The defendant admitted it was for an antecedent debt and not paid in the ordinary course, but the defendant asserted the new value defense. 11 U.S.C. § 547(c)(1)(B). Although the defendant claimed that the defendant shipped the goods the same day, the defendant was unable to prove that the good were shipped prior to filing. Alternatively, the defendant had argued that if the goods shipped post-petition, they were an administrative expense under 11 U.S.C. § 503(b)(1)(A). The court found that the record did not support that conclusion as a matter of law. The court determined that the checks, totaling approximately $169,000, were not preferences, but denied summary judgment as to the wire transfer.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.