Timing Is Everything: The Seventh Circuit Clarifies the Ordinary Course of Business Preference Defense
The Seventh Circuit has provided useful guidance to bankruptcy practitioners on a potential expansion by bankruptcy courts of the ordinary course of business defense to preference avoidance under Bankruptcy Code Section 547(c)(2). The Seventh Circuit indicated that bankruptcy courts may be permitted to use either the total-range method or the average-lateness method to determine the payment range for a prepreference period historical range.
Michael D. Jankowski is a shareholder in Reinhart Boerner Van Deuren s.c.’s Corporate Law, Business Reorganization, and Banking and Finance practices, specializing in complex corporate bankruptcies, creditors’ rights, workouts, restructurings, troubled transactions, receivership, and commercial transactions. Peter C. Blain is a shareholder in the firm and the chair of the Business Reorganization practice representing diverse parties in complex distress transactions both in and outside of bankruptcy proceedings. The authors may be reached at firstname.lastname@example.org and email@example.com, respectively.
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