(Bankr. S.D. Ind. Oct. 28, 2015)
The bankruptcy court grants the defendant’s motion for summary judgment in this preference action. The defendant had sold and delivered cattle to the debtor prepetition and received payment in the form of checks three days after delivery. The checks were then voided and replaced by a single wire transfer a few days later. All of this occurred within 90 days of the petition date. The court finds that the ordinary course defense does not apply based on lack of evidence of the terms of prior transactions between the parties. The court finds, however, that the contemporaneous exchange defense is applicable. The debtor and the defendant intended a contemporaneous exchange and such an exchange was actually accomplished (despite the voiding of the checks and replacement by wire transfer). Opinion below.
Author: Matt Lindblom