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by Timothy M. Lupinacci, Baker, Donelson, Bearman, Caldwell & Berkowitz
P.C. Norton Law Advisor (July 2001) (Updated).
Wire transfers and other forms of electronic payment are still new enough to give courts pause in their analysis of what is "ordinary." Section 547(c)(2) deals with the subjective and objective use of wire transfers between the debtor and transferee. Establishing that wire transfers are ordinary within an industry is a matter of establishing 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 fall outside that broad range should be deemed extraordinary and therefore outside the scope of subsection c." In re Tolona Pizza Prods. Corp., 3 F.3d at 1033.
Where wire transfers are most often at issue is when a wire transfer is not the normal method of payment, when examined subjectively, between the debtor and the transferee, but rather is used in a one-time or sporadic deviation from the norm. The majority of cases seem to favor this deviation being at least one factor sufficient to bring the transfer out of the 547(c)(2) exception to avoidance. See, e.g., Brandt v. Repco Printers & Lithographics, Inc. (In re Healthco Int'l., Inc.), 132 F.3d 104 (1st Cir. 1997); Gasmark Ltd. Liquidating Trust v. Louis Dreyfus Natural Gas Corp., 158 F.3d 312 (15th Cir. 1998).
At least one case has shown that changes in only the method of payment by a debtor is not enough to make the business relationship not ordinary. See, e.g., In re Brown Trans. Truckload, Inc., 161 B.R. 735. However, a line of case law is clear that a wire transfer to replace some form of failed payment is likely to fall outside of the ordinary course of business between the parties. See, e.g., In re Spirit Holding Co., Inc.,
