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in litigating and resolving such a case. The Bankruptcy Code creates numerous exceptions to preference avoidance. Although seven exceptions to avoidance of a preference exist, the most common defenses are the contemporaneous exchange for new value; ordinary course of business; and subsequent new value.
The defenses under section 547(c) are designed to encourage creditors to continue to deal with troubled debtors on normal business terms by obviating any worry that a subsequent bankruptcy filing might require the creditor to disgorge a preferential payment. Hall-Mark Elecs. Corp. v. Sims (In re Lee), 108 F.3d 239 (9th Cir. 1997).
B. Waiver of Defenses.
Marshack v. Orange Commercial Credit (In re Nat'l Lumber & Supply, Inc.), 184 B.R. 74 (B.A.P. 9th Cir. 1995). The section 547(c) defenses are affirmative defenses which may be waived. Waiver is an issue to be determined by the trial court. In this case, the bankruptcy court held that the defendant did not waive its defenses by raising them for the first time in its response to the trustee's motion for summary judgment. The trustee argued that he was prejudiced by the defendant's inadequate pleading because the discovery cutoff date lapsed over two months before the defenses were first raised. The court rejected this argument stating that the trustee should have requested an extension of the discovery cutoff date. See also Whittaker
v. Citra Trading Corp. (In re Int'l Diamond Exch. Jewelers, Inc.), 177 B.R. 265 (Bankr. S.D. Ohio 1995) (court stated that where defendant failed to raise defenses in answer or in response summary judgment pleadings, the defendant was precluded from raising the defenses at a later date). The limitation periods of section 546(a) and section 549(d) are statutes of limitation rather than jurisdictional limitations on the court and accordingly can be waived. Pugh v. Brook (In re Pugh), 158 F.3d 530 (11th Cir. 1998).
