SEAN H. LANE, UNITED STATES BANKRUPTCY JUDGE
Before the Court are two adversary proceedings brought by the Chapter 7 Trustee (the "Plaintiff" or the "Trustee") of Waterford Wedgwood USA, Inc. ("Waterford") and Royal Doulton USA, Inc. ("Doulton" and, together with Waterford, the "Debtors") against United Parcel Service of America Inc., UPS Freight, UPS Professional Services, UPS Supply Chain Solutions (Georgia), UPS-Consolidated, and UPS-Philly (collectively, "UPS" or the "Defendants"). Pursuant to Section 547 of the Bankruptcy Code, the Trustee seeks to recover alleged preferential transfers made to UPS in the amount of $897,546.85 by Waterford and $81,828.22 by Daulton within 90 days of the filing of this bankruptcy case. The Trustee also requests prejudgment interest. UPS does not dispute that the transfers were preferences but asserts that they were made in the ordinary course of business and under ordinary business terms as contemplated by Sections 547(c)(2)(A) and 547(c)(2)(B) of the Bankruptcy Code, respectively. Based on the evidence presented at trial,
The parties have stipulated to the relevant facts regarding the Debtors, the bankruptcy case, and the parties' business relationship. Waterford and Doulton were wholly owned indirect subsidiaries of Waterford Wedgwood PLC ("PLC"), an Irish company. See Joint Pretrial Orders, Section III, ¶ 1. The Debtors were in the business of importing, distributing and selling china, crystal and other consumer goods that were manufactured by PLC and its affiliates. See id. at Section III, ¶ 2. In connection with this business, the Debtors purchased and obtained shipping and related services from UPS. See id. at Section III, ¶ 3. Upon providing services to the Debtors, the Defendants would issue an invoice. See id. at Section III, ¶ 4. The Debtors would pay UPS by check. See id.
On January 5, 2009, PLC was placed in receivership in Ireland and certain of its subsidiaries and affiliates were placed in administration in the United Kingdom. See Daulton Joint Pretrial Order at Section III, ¶ 10; Waterford Joint Pretrial Order at Section III, ¶ 7. On February 27,
The Trustee filed the Waterford adversary proceeding on April 20, 2011 and the Daulton adversary proceeding on May 24, 2011. Both seek the return of money paid by the Debtors during the statutory preference period. Transfers from the Debtors to the Defendants on or after January 23, 2009 through the Petition Date are covered by the 90 day time period set forth in Section 547(b)(4)(A) of the Bankruptcy Code (the "Preference Period"). Trial in these cases took place on March 19, 2013. See Transcript of Trial (Waterford Adversary ECF No. 30; Daulton Adversary ECF No. 24). The parties completed their post-trial briefing on May 16, 2013.
To be avoidable as a preferential transfer, a payment must satisfy each of the requirements of Section 547(b) of the Bankruptcy Code. The Trustee bears the burden of proving the transfers were:
11 U.S.C. § 547(b). UPS does not challenge the Trustee with respect to these elements, and the Court finds that the Trustee has made the necessary prima facie case under Section 547(b) that the payments were preferential transfers.
UPS instead contends that the payments fall under the two exceptions contained in Section 547(c)(2) of the Bankruptcy Code. Section 547(c)(2), as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), provides that:
11 U.S.C. § 547(c)(2).
Section 547(c)(2) is meant to protect "recurring, customary credit transactions that are incurred and paid in the ordinary course of business of the debtor and the debtor's transferee." Official Comm. Of Unsecured Creditors of Enron Corp. v. Martin (In re Enron Creditors Recovery Corp.), 376 B.R. 442, 459 (Bankr. S.D.N.Y.2007) (quoting Sender v. Heggland Family Trust (In re Hedged-Investments Assocs.), 48 F.3d 470, 475 (10th Cir.1995)). The purpose of the exception is to "leave undisturbed normal financial relations, because it does not detract from the general policy of the preference section to discourage unusual action by either the debtor or [its] creditors during the debtor's slide into bankruptcy." Lawson v. Ford Motor Co. (In re Roblin Indus., Inc.), 78 F.3d 30, 41 (2d Cir.1996) (quoting H.R.Rep. No. 95-595 (1978) at 373, reprinted in 1978 U.S.C.C.A.N. 6329).
Prior to 2005, Section 547(c)(2) required a creditor to prove that the transfer was made both in the ordinary course of the debtor's business under Section 547(c)(2)(A) and according to ordinary business terms under Section 547(c)(2)(B). The BAPCPA amendments made the test disjunctive, allowing a defendant to prevail by proving either the so called "subjective" test under Section 547(c)(2)(A), or the so called "objective" test under Section 547(c)(2)(B). See Jacobs v. Gramercy Jewelry Mfg. Corp. (In re M. Fabrikant & Sons, Inc.), 2010 WL 4622449, at *2 (Bankr.S.D.N.Y. Nov. 4, 2010). As the wording of the subsections was not changed by BAPCPA in 2005, the case law prior to BAPCPA's enactment as to the requirements of each subsection remains good law. See id. at *2 (citations omitted).
A creditor bears the burden of proving the defenses by a preponderance of the evidence. Id. at 39 (citations omitted); 11 U.S.C. § 547(g). UPS has invoked both subsections of Section 547(c)(2) by submitting evidence to support its argument that the transfers were "made in the ordinary course of business or financial affairs of the debtor and the transferee" and were "made according to ordinary business terms." See 11 U.S.C. § 547(c)(2). While the Court reserves decision today on whether any transfers were made in the ordinary course of business under Subsection (A), it is necessary to discuss both defenses in order to understand and evaluate the arguments made by the parties on the ordinary business terms defense under Subsection (B).
Subsection (A) is a "subjective element that requires an examination of whether a transfer was ordinary between the parties to the transfer." Daly v. Radulesco (In re Carrozzella & Richardson), 247 B.R. 595, 603 (2d Cir. BAP 2000) (citations omitted); see also In re Enron Creditors Recovery Corp., 376 B.R. at 459 (stating that the subjective test focuses solely on the prior dealings of debtor and creditor). In determining whether a transfer satisfies the requirements of Section 547(c)(2)(A), courts examine several factors including "(i) the prior course of dealing between the parties, (ii) the amount of the payment, (iii) the timing of the payment, (iv) the circumstances of the payment, (v) the presence of unusual debt collection practices, and (vi) changes in the means of payment." Buchwald Capital Advisors LLC v. MetlSpan I., Ltd. (In re Pameco Corp.), 356 B.R. 327, 340 (Bankr.S.D.N.Y. 2006); see also Official Comm. of Unsecured Creditors of 360networks (USA) Inc.
The creditor must establish a "baseline of dealings" between the parties in order to "enable the court to compare the payment practices during the preference period with the prior course of dealing." In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *3 (citations omitted); see also Cassirer v. Herskowitz (In re Schick), 234 B.R. 337, 348 (Bankr.S.D.N.Y. 1999). The creditor must "demonstrate some consistency with other business transactions between the debtor and the creditor." In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *3 (citations omitted). "The starting point — and often ending point — involves consideration of the average time of payment after the issuance of the invoice during the pre-preference and post-preference periods, the so-called `average lateness' computation theory." Id. While a late payment is usually nonordinary, the defendant can rebut this presumption if late payments were the standard course of dealing between the parties. See id. (quoting 5 ALAN N. RESNICK & HENRY J. SOMMER, COLLIER ON BANKRUPTCY ¶ 504.04[2][ii], at 547-55 (16th ed. 2010)). "To determine whether a late payment may still be considered ordinary between the parties, a court will normally compare the degree of lateness of each of the alleged preferences with the pattern of payments before the preference period to see if the alleged preferences fall within that pattern." 5 COLLIER ON BANKRUPTCY ¶ 504.04[2][ii], at 547-55. Generally, this involves a comparison of the average number of days between the invoice and payment dates during the pre-preference and preference periods. See In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *3; see also Hassett v. Altai, Inc. (In re CIS Corp.), 214 B.R. 108, 120 (Bankr.S.D.N.Y.1997).
Subsection (B) is an objective test which "looks not to the specifics of the transaction between the debtor and the particular creditor, but rather focuses on general practices in the industry, in particular the industry of the creditor." Abovenet, Inc. v. Lucent Technologies, Inc. (In re Metromedia Fiber Network, Inc.), 2005 WL 3789133, *5 (Bankr.S.D.N.Y. Dec. 20, 2005). It is well established that the creditor's industry is the measure for ordinariness under this subsection. See, e.g., Matter of Midway Airlines, 69 F.3d 792, 797 (7th Cir.2004); Sigmon v. Butner (In re Johnson Bros. Trucker, Inc.), 2001 WL 520649, *4 (4th Cir. May 15, 2001); Sass v. Vector Consulting, Inc. (In re Am. Home Mortgage Holdings, Inc.), 476 B.R. 124, 140-41 (Bankr.D.Del.2012); Hechinger Liquidation Trust v. James Austin Co. (In re Hechinger Inv. Co. of Delaware, Inc.), 320 B.R. 541, 550 (Bankr.D.Del. 2004).
In In re Roblin Indus., Inc., the Second Circuit held that "`ordinary business terms' refers to the general practices of similar industry members and that `only dealings so idiosyncratic as to fall outside that broad range should be deemed extraordinary and therefore outside the scope of subsection C.'" Roblin, 78 F.3d at 39-40 (quoting In re Tolona Pizza Products Corp., 3 F.3d 1029, 1033 (7th Cir.1993). "Under this standard, a creditor must show that the business terms of the transaction in question were `within the outer limits of normal industry practices....'" Id.); see also In re Carled, 91 F.3d 811, 818 (6th Cir.1996) (holding that late payments are made according to ordinary business terms so long as they are not "aberrational, unusual or idiosyncratic" for creditors in the defendant's
To demonstrate that the payments from the Debtors to UPS were similar to those in the industry, UPS provided evidence of payments and invoice records between itself and the Debtors. See Joint Exhibits A, B, C, D, and E and Defendants' Exhibit C. The amount and timing of those payments are not in dispute. The only other evidence presented at trial was the testimony of Thomas Salutric, an employee of UPS. Mr. Salutric is a corporate credit manager at UPS and has worked in billing, credit management, credit approval, and credit risk analysis for more than 25 years. See Defendants' Exhibit B. Mr. Salutric is also an active member of the Credit Research Foundation and the National Association of Credit Managers. See id.
Mr. Salutric testified, among other things, about the contract between the Debtors and UPS, its terms, and how and when the payments in question were made. See Trial Tr. 82:15-83:7. Mr. Salutric's testimony focused on the time customers took to pay UPS compared to other similarly situated shipping companies. He testified that the Defendants followed normal industry practice during the period Defendants provided shipping services to the Debtors. Mr. Salutric noted that UPS is the largest player in the domestic shipping market with approximately half of the domestic market share, and that it is not uncommon in the industry to allow some flexibility in paying invoices. See id. at 70:23-25; 71:1-6; 74:6-75:6; 89:16-90:13. While UPS's stated invoice terms are 32 days, Mr. Salutric testified that because of the economic downturn in late 2008, many of UPS's larger customers began to request some latitude in the time to pay invoices. See id. at 74:16-25; 75:1-6; 85:7; 86:6-10. Customers of other transportation companies did the same. See id. at 75:1-6. On average, during the time the Debtors conducted business with the Defendants, the Debtors paid their invoices later than their stated terms: approximately 51 days
Mr. Salutric's analysis of industry practices relied heavily upon data collected from the Credit Risk Monitor database ("CRMZ"), which monitors the average number of days for a company to receive revenue after a sale has been made. See Defendants' Exhibit A; Trial Tr. 79:16-25. Mr. Salutric used the information in the CRMZ database to compile a list of forty businesses in the domestic shipping industry, including UPS, FedEx Corporation, and Ryder System, Inc., and to calculate
According to the Defendants' CRMZ database chart, UPS received payments from all of its customers in 2009 on average 44 days after sale while industry competitors, FedEx and Ryder, received payments on average in 40 and 45 days respectively. See Defendants' Exhibit A. In 2008, UPS received payments on average within 45 days and FedEx and Ryder received payments on average in 41 and 46 days respectively. See id. Mr. Salutric concluded that UPS's average days to payment during 2008 and 2009 aligned with industry practice. Mr. Salutric further concluded that during the period UPS and the Debtors conducted business, UPS's pay range was between 16 and 88 days, which he found to be a reasonable deviation from industry norm considering market conditions and the size of the Debtors. See Trial Tr. 102:15-104:16.
The Trustee did not present any witnesses at trial, choosing only to engage in limited cross examination of Mr. Salutric. Trustee's counsel asked limited questions about the use of the CRMZ database and did not identify any alternative source of information about the payment practices in the domestic shipping industry. The Trustee instead focused on the proper scope of the ordinary business terms defense and criticism of Mr. Salutric's methodology. The Trustee's arguments fall generally into four categories, which the Court will address separately.
The Trustee first argues that the relationship between the Debtors and UPS was not conducted in accordance with ordinary business terms because there were fluctuations in the parties' payment history over time. To illustrate this point, the Trustee divided the history of payments between UPS and the Debtors into three periods: 1) November 24, 2007 to September 30, 2008, which was more than six months before the bankruptcy filing; 2) October 2, 2008 to February 28, 2009, which was over one month into the 90 day Preference Period; and 3) March 1, 2009 to April 7, 2009, which includes some 38 days of the 90 day Preference Period. See Plaintiff's Exhibits 1, 2, and 3. The purported purpose of this analysis was to contrast the payment times during the first and third periods with the payment times during the second period.
The Trustee's argument fails, however, because it improperly conflates the subjective and objective components of Section 547(c)(2). It is essentially asking the Court to rule that the objective defense cannot be met if the parties' relationship changes over time.
Indeed, "courts do not look at the manner in which one particular creditor interacted with other similarly situated debtors, but rather analyze whether the particular transaction in question comports with the standard conduct of business within the industry." Logan v. Basic Distribution Corp. (In re Fred Hawes Org., Inc.), 957 F.2d 239, 245-46 (6th Cir.1992); see also Abovenet Inc. v. Lucent Technologies, Inc. (In re Metromedia Fiber Network, Inc.), 2005 WL 3789133, at *5, 2005 Bankr. LEXIS 3168, at *17 (Bankr. S.D.N.Y. Dec. 20, 2005) ("`[M]ade according to ordinary business terms,' looks not to the specifics of the transaction between the debtor and the particular creditor, but rather focuses on general practices in the industry, in particular the industry of the creditor.") "[T]he question must be resolved by consideration of the practices in the industry — not by the parties' dealings with each other." In re Gulf City Seafoods, 296 F.3d at 369.
The Trustee appears to be advocating for a return to the pre-BAPCPA test, when a successful defense under Section 547(c)(2) required a creditor to prove not only that the transfer was made in the ordinary course of business between the debtor and transferee, but also that it was made according to ordinary business terms (i.e., both the subjective and objective elements). But the statutory language of the BAPCPA amendments is clear. Congress made the test disjunctive, allowing a defendant to prevail by proving either the subjective test under Section 547(c)(2)(A), or the objective test under Section 547(c)(2)(B). See In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *2; see, e.g., Appalachian Oil Co. v. Va. State Lottery Dept. (In re Appalachian Oil Co.), 2012 WL 4754675, 2012 Bankr.LEXIS 4677 (Bankr.E.D.Tenn. Oct. 4, 2012) (finding
Indeed, the Trustee's view is contrary to the Second Circuit's clear guidance in Roblin Industries, Inc. v. Ford Motor Company (In re Roblin Industries, Inc.), 78 F.3d 30 (2d Cir.1996), which addressed the relationship between the objective and subjective elements of Section 547(b)(2). In Roblin, the Second Circuit adopted the objective test used by Tolona Pizza, stating that a payment made according to ordinary business terms must be "ordinary from the perspective of the industry." Id. at 40. In reaching its conclusion, the Second Circuit observed that an alternative to the objective approach was to "look to the conduct of the parties themselves to determine if the terms of a preferential transfer are ordinary." Id. at 41. But it remarked that "by treating both [Section 547(c)(2)(A) and (B)] as subjective requirements and focusing entirely upon the conduct of the parties in question, the ordinary business terms requirement becomes surplusage. Congress could not have intended that one of the three separate requirements enacted to satisfy [Section] 547(c)(2) was simply redundant." Id.
For its second argument, the Trustee urges the Court to focus on the Defendants' stated terms for payment. Rather than compare the actual payment history with the typical payment practices in the industry, the Trustee appears to propose that the Court examine whether there has been a deviation from a creditor's stated payment policy. See Plaintiff's Post-Trial Brief at 6. But such an analysis would ensure that any late payment would be a transfer outside of ordinary business terms. As such, the defense would be of little use to a creditor. See In re Carled, 91 F.3d 811, 818 (6th Cir.1996) (holding that late payments are made according to ordinary business terms so long as they are not "aberrational, unusual or idiosyncratic" for creditors in the defendant's industry).
Such a reading is inconsistent with the Second Circuit's interpretation of the ordinary business terms test. In
Roblin Indus., 78 F.3d at 42 (emphasis added); see also Ganis Credit Corp. v. Anderson (In re Jan Weilert RV, Inc.), 315 F.3d 1192, 1198 (9th Cir.2003) ("[C]reditors are not required to prove a particular uniform set of business terms, rather, "ordinary business terms" refers to the broad range of terms that encompasses the practices employed by those debtors and creditors, including terms that are ordinary for those under financial distress.") (emphasis added).
The Trustee's view would also require a creditor to steadfastly adhere to the same business practices throughout the entirety of its relationship with a debtor. That would unduly tie the hands of the creditor to deal with the exigencies of business in a real world setting and discourage creditors from continuing to do business with a company in distress.
Roblin, 78 F.3d at 42. The Second Circuit's flexible approach bolsters the two-fold purpose of preference law: "the concern for the equitable treatment of all creditors as well as the desire to discourage creditors from hastily forcing troubled businesses into bankruptcy." Id. at 40. The Trustee's position, therefore, is inconsistent with the general purposes of preference law:
Roblin, 78 F.3d at 41.
In any case, the Court is hard pressed to see how a historical variation in the
Turning to the third category, the Trustee takes issue with the Defendants' method for comparing payments here to UPS with payments made by customers to other domestic shipping companies. As a threshold matter, the Trustee complains that looking "on an invoice-by-invoice basis, at each collection UPS made during the preference period, and declar[ing] each payment ordinary (or not ordinary), based on whether it fell within the outer bounds of the times other participants in the transportation industry took, on average, to collect their invoices pursuant to their individual business terms [is] ... unprecedented, and inconsistent with the case law..." Plaintiff's Post-Trial Brief at 6. But the Court notes that other courts have done a similar analysis. See, e.g., Schoenmann v. BCCI Constr. Co. (In re Northpoint Communs. Group, Inc.), 361 B.R. 149, 160 (Bankr.N.D.Cal.2007). Indeed, such an approach is consistent with the plain language of the statute that "the trustee may not avoid under this section a transfer ... to the extent that such transfer was ... made according to ordinary business terms." 11 U.S.C. § 547(c)(2)(B) (emphasis added); see also Roblin Indus., 78 F.3d at 40 (quoting Tolona Pizza, 3 F.3d at 1033) ("Under this standard, a creditor must show that the business terms of the transaction in question were `within the outer limits of normal industry practices' ... Assuming subsections (A) and (B) are satisfied, only when a payment is ordinary from the perspective of the industry will the ordinary course of business defense be available for an otherwise voidable preference.") (emphasis added); Metromedia Fiber Network, 2005 WL 3789133, at *8, *10, 2005 Bankr. LEXIS 3168, at *24, *30 (Bankr.S.D.N.Y. Dec. 20, 2005) ("As enacted by Congress, the statute requires the Court to focus on the transfer which is being challenged.... [Section 547(c)(2)(B)] asks whether the
The parties fail to cite any case law on the proper method for evaluating the actual transactions between the Debtors and UPS to see if they comport with industry practices. Nor did the Court find a consensus in the case law on the appropriate methodology. The Court, however, believes that it is useful to look to how courts analyze the subjective "ordinary course of business" defense. Under an ordinary course analysis, "`[t]o determine whether a late payment may still be considered ordinary between the parties, a court will normally compare the degree of lateness of each of the alleged preferences with the pattern of payments before the preference period to see if the alleged preferences fall within that pattern.' ... Generally, this involves a comparison of the average number of days between the invoice and payment dates during the pre-preference and preference periods." Davis v. R.A. Brooks Trucking, Co. (In re Quebecor World (USA), Inc.), 491 B.R. 379, 386 (Bankr. S.D.N.Y.2013) (quoting 5 COLLIER ¶ 504.04[2][ii], at 547-55; citing In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *4; Hassett v. Altai, Inc. (In re CIS Corp.), 214 B.R. 108, 120 (Bankr.S.D.N.Y. 1997)). Though the subjective test compares the course of dealings of the parties, it essentially is a comparison of two sets of data over differing periods of time. It therefore seems reasonable to apply these same principles to an objective analysis by comparing the timing of purported preference payments with the timing of payments in the industry as a whole.
In the subjective analysis, courts do this by using the "average lateness" method, "which looks to the average time of payment after the issuance of the invoice during the historical and [P]reference [P]eriods. In deciding what payments are ordinary, a court reviews the range of payments centered around the average and also groups the payments in buckets by age." Quebecor, 491 B.R. at 388. By contrast, courts have criticized the "total range" method, which considers a transfer during the preference period to be ordinary if it is paid within the minimum and maximum days in the range of all payments during the historical period. See id. at 387-88. Total range analysis has been rejected because it "impermissibly expand[s] the ranges of ordinary transactions ... [and] captures outlying payments that skew the analysis of what is ordinary." See id. (citing In re M. Fabrikant & Sons, Inc., 2010 WL 4622449, at *3 n. 2, 2010 Bankr. LEXIS 3941, at *3 n. 2 (Bankr.S.D.N.Y.2010); In re CIS Corp., 214 B.R. 108, 120 (Bankr.S.D.N.Y. 1997)).
When viewed in this light, Mr. Salutric's analysis is revealed as suspect. Simply put, his range of permissible payments is too broad. As the Trustee points out, Mr. Salutric uses a range of 14 to 70 days in 2008 and 16 to 72 days in 2009 that includes outliers that unreasonably extended the range. More specifically, Mr. Salutric used the CRZM database to rank businesses in the shipping industry according to average DSO per year for both 2008 and 2009. See Defendants' Exhibit A. Mr. Salutric testified that he looked to the payment practices in 90% of the industry, removing only the top and bottom five percent in his analysis as outliers.
As an alternative, the Trustee believes that a more accurate depiction of the industry pay range is a single standard deviation from the mean.
When compared to this methodology, the naked, unweighted averages used by Mr. Salutric can be seen as not appropriately representative. His mechanical exclusion of two companies from the list of forty does not appropriately account for outliers and skews the industry range too
Fourth and finally, the Trustee argues that the preference payments are not made pursuant to ordinary business terms because the Defendants were paid in full prior to the Debtors' bankruptcy. It appears that the Defendants disagree and, in fact, the Trustee has failed to provide evidence that the Defendants have been paid in full. The Trustee relies on the fact that no proof of claim was filed by the Defendants. In and of itself, however, this is not enough. The Trustee also states that Joint Exhibit A shows that all of the Defendants' invoices were paid by the end of the Preference Period. But this exhibit does not establish that fact; the 77 page exhibit merely lists payments and invoices but does not provide a balance that nets out the two. In any event, payment in full does not necessarily constitute treatment outside of ordinary business terms. See Tolona, 3 F.3d at 1031 (ruling that the payments in question had followed ordinary business terms, despite noting that "the checks ... cleared and as a result Tolona's debts to Rose were paid in full.")
In sum, the Court concludes that the Defendants are entitled to the benefit of the ordinary business terms defense, but not to the extent claimed. The Court cannot determine the monetary scope of its ruling on the ordinary business terms defense, nor have the parties quantified the impact of the new value defense. The Court requests that the parties quantify these matters and inform the Court whether it is necessary for the Court to decide whether any of these transfers are covered by the ordinary course of business defense under Section 547(c)(2)(A) of the Bankruptcy Code. The parties should contact Chambers to set a status conference to discuss these remaining issues.
Finally, the Court grants the Trustee's request for prejudgment interest for any preferences recoverable, which is a determination within a court's discretion for actions brought under Section 547 of the Bankruptcy Code. In re Pameco Corporation, 356 B.R. 327, 342 (Bankr. S.D.N.Y.2006); In re Cyberrebate.com, Inc., 296 B.R. 639, 645 (Bankr.E.D.N.Y. 2003). Pursuant to Section 550(a), a plaintiff can recover a preferential transfer or its value. 11 U.S.C. § 550(a). The policy of Section 550 is to restore the estate the full value of the asset transferred to the preferred creditor, thereby compensating the estate for the loss of the time value of the asset. In re L & T Steel Fabricators, Inc., 102 B.R. 511, 521 (Bankr.N.D.La. 1989). Value includes pre-judgment interest from the date of the transfer. Id. The time value of money is an asset of the estate that should be recovered for the
For the reasons stated above and consistent with its Opinion, the Court determines that the Defendants prevail in part on their ordinary business terms defense under Section 547(c)(2)(B) of the Bankruptcy Code. The Court reserves judgment on the ordinary course of business defense under Section 547(c)(2)(A) until it becomes clear that a decision is necessary on that issue. Defendants' should settle an order on three days' notice.
