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amounts are never ordinary. The Seventh Circuit's acknowledgment that wire transfers are ordinary in commercial use may be beneficial to a Defendant tempting to argue same.
Although there are few reported decisions on the issue, reported preference decisions discussing this matter should increase with the continued advancement of technology and the widespread use of the internet and alternate payment systems in everyday commerce. The District Court in Brown Transport appears to have the correct analysis that as long as all other aspects of the payment are ordinary (i.e. the number of days beyond invoice date and the lack of collection pressure), then the fact that the method of payment changed from check to wire transfer should not cause a Defendant to lose under the ordinary course of business defense. Both corporate check and wire transfer are varieties of payments of cash. The global economy has reached the point in technology where wire transfer should be viewed interchangeably with checks even when a company decides to change its payment method from checks to wire transfers. It should be interesting to see how courts address future, more advanced, technological changes as they seek to determine what is "ordinary."
State law relation-back statutes do not supersede or in any way control whether a transfer is preferential under section 547(b) or not avoidable under 547(c)(3)(B). Fink v. Fidelity Fin. Servs., Inc. (In re Beasley), 522 U.S. 211, 118 S. Ct. 651, 139 L. Ed.2d 571 (1998); accord In re Hamilton, 892 F.2d 1230 (5th Cir. 1990); In re Loken, 175 B.R. 56 (9 Cir. B.A.P. 1994); contra In re Hesser, 984 F.2d 345 (10th Cir. 1993); In re Busenlehner, 918 F.2d 928 (11th Cir. 1990).
Section 547(c)(3) prevents the avoidance of liens and security interests that secure loans made to a Debtor for the specific purpose of acquiring the property that serves as collateral for the loan. The elements of the defense closely track the criteria described in Article 9 of the Uniform Commercial Code for the creation of a purchase money security interest. See UCC § 9-103. In fact, the 20-day safe harbor provision was
