Some of the most oft-discussed changes made by Congress in the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act are the seemingly small, but significant, changes made to �547(c)(2), often referred to as the “ordinary course of business” defense to the general provisions covering the avoidability of preferential transfers. Until now, most of the discussion concerning the changes made to this subsection have been academic; now we have a case opining on the changes.
In Hutson v. Branch Bank & Trust Co. (In re National Gas Distributors LLC), the Chapter 11 trustee sought to avoid transfers aggregating approximately $3.3 million made by the debtor to its bank in the 90-day period immediately preceding the filing of National’s bankruptcy case. The bank defended on the basis that the payments were subject to the “ordinary course of business” defense.
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