Articles tagged with: ordinary course of business defense

articles, videos about elements, proof of ordinary course of business defense to bankruptcy preference claims

W.D. Missouri Bankruptcy Court Rejects Pseudo Ponzi Scheme Challenge to Ordinary Course Preference Defense

Western District of Missouri Bankruptcy Judge Dennis R. Dow holds that, in this bankruptcy preference action against trade creditors (the “Defendants”), the source of funds is irrelevant to the determination of the application of the §547(c)(2) ordinary course defense.  The Chapter 7 trustee (the “Trustee”) argued that the source of the funds debtors Joseph and Rebecca Graff (the “Debtors”) used to pay the Defendants was inconsistent with the ordinary course defense.  The Trustee attempted to bootstrap case authority denying the ordinary course of business defense as to payments to investors in a “Ponzi scheme”.  The Court rejected the argument.  This decision addresses an issue of increasing importance as Chapter 7 trustees seek to apply the Ponzi scheme label to legitimate business dealings in order to establish the prima facie elements of preference claims and defeat preference defenses.

Ocean Ridge Capital Advisors LLC, as Creditor Trustee v. Landscape Forms, Inc. – Motion to Dismiss Based on “Single Transaction” Ordinary Course of Business Defense

05/17/2011 – Defendant’s Motion to Dismiss filed in the WCI Communities, Inc. Adversary Proceedings by Landscape Forms, Inc. before Judge Carey in the District of Delaware.  A rare (with reason) motion to dismiss based on the ordinary course of business defense. Rarer still, a motion to dismiss on ordinary course of business grounds where the business relationship between the Debtor and the Defendant is only a single transaction. The chances of Judge Carey granting this motion to dismiss are slim but the briefing and ultimate decision are worthy of attention.