by Bill Gray
In our last post we outlined the legal defenses against a
bankruptcy preference claim. Now let's look at the "ordinary course
payment" defense in a bit more detail.
An ordinary course payment is, essentially, when there
was nothing at all unusual or out of the ordinary pertaining to the payment at
issue. For example, prior to the look back preference period, a debtor always
pays invoices from a creditor within 30 days of receipt of the invoice.
Likewise, for all payments made within the preference look back period, the
debtor also pays invoices within 30 days of receipt. Because there is nothing
different, or out of the ordinary, with the payments in the preference period,
when compared to payments outside of the preference period, the
creditor has a defense to the preference claim. This makes perfect sense,
since the public policy here is to prevent a debtor from, in fact, favoring or
preferring certain creditors over other creditors.
In the next post, we'll examine another one of these
defenses so you can be ready if a trustee wanting a return of payment reaches
out to your company. If you are party to a preference claim, you should contact
creditors' rights lawyer who can explain your rights.
Read more business law articles at Virginia Business Lawyers
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