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debtor on a weekly payment schedule immediately prior to the preference period weighed heavily in the Court's analysis.
by Timothy M. Lupinacci
a. Introduction.
One practical issue most bankruptcy practitioners face in defending a preference action under the ordinary course of business defense is adducing sufficient evidence to prove industry standards under § 547(c)(2). Many assume this analysis will result in a battle of the experts, however, a look at case law suggests uncertainty over the amount of evidence necessary to prove ordinary business terms under the preference statute.
b. The Burden of Proving Ordinary Business Terms.
In applying § 547(c)(2)(C), the court looks at '"those terms employed by similarly situated debtors and creditors facing the same or similar problems."' In re Jan Weilert RV, Inc., 315 F.3d at 1197 (citing In re Kaypro, 218 F.3d at 1074 (quoting Lawson v. Ford Moror Co. (In re Roblin Indust., Inc.), 78 F.3d 30, 42 (2d Cir. 1996) amended by Ganis Credit Corp. v. Anderson (In re Jan Weilert RV, Inc.), 315 F.3d 1028 (9th Cir. 2003). If the '"terms in question are ordinary for industry participants under financial distress, then that is ordinary for the industry.'" Id. In Tolona Pizza, the Seventh Circuit Court of Appeals stated that "'ordinary business terms' refers to the range of terms that encompasses the practices in which firms similar in some general way to the creditor in question engage, and that only dealings so idiosyncratic as to
