subject to preference

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A debtor's payments to an unsecured creditor during the 90-day preference period are subject to preference risk.
That lien will stay intact." A mechanic's lien also is not subject to preference payment rules because the creditor has that legal right to file, Borges added.
It did not matter that the beneficiary sought payment of previously paid indebtedness subject to preference risk.
On appeal, United argued that it was not subject to preference liability on account of the pre-petition joint check payment in the amount of $6,827.58 because VCW could not satisfy the greater than liquidation recovery requirement of Section 547(b)(5) (that United had received more as a result of the payment than it would have recovered in a hypothetical Chapter 7 liquidation involving VCW where Kinsley had not made the joint check payment).
Applying the lowest intermediate balance test in this manner, the court held that $191,631.13 of the alleged preference of $215,312 was paid from trust funds and not subject to preference liability.
There was no question that Samsung's receipt of payment for its proper letter of credit draw was not subject to preference risk.
The Second Circuit held that a creditor was not subject to preference liability when, at the time of the payment, the creditor had the right, under state law, to record a fully secured mechanic's lien in the debtor's real property.
Instead, 'unusual action' or 'deviations from established practices' are usually condemned as 'not ordinary' and thus subject to preference avoidance." Establishing these unusual practices or deviations, however, required some guidelines, which the court created and have come to serve as sort of a road map for conducting communications with a distressed customer without risking an ordinary course defense.
A critical vendor remains subject to preference liability for payments the vendor had received within 90 days of bankruptcy that otherwise satisfy the requirements of a preference under Section 547(b) of the Bankruptcy Code.
This requirement of making whole the non-debtor party to an assumed contract would clearly be undermined if the creditor remained subject to preference liability on account of the debtor's payments to the creditor during the 90-day preference period.
Instead, "unusual action" or "deviations from established practices" are usually condemned as "not ordinary" and thus subject to preference avoidance.
The court sided with the Trustee and ruled that Reliable was subject to preference exposure because Reliable could not satisfy the Section 547(c)(1) contemporaneous exchange for new value defense to the Trustee's preference claim.