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New Terms Can Expose Creditor To Preference Action

Law360 (July 31, 2007, 12:00 AM EDT) -- The U.S. Court of Appeals for the Third Circuit has issued a recent decision that is instructive as to what creditors should not do when a customer is having a hard time paying its bills.

In re Hechinger, 2007 WL 1630004 (3d Cir. June 7, 2007), the debtor, a purchaser of treated lumber products, faced financial difficulty prior to filing for Chapter 11 protection.

A creditor (Universal Forest Products), who had done business with the debtor for 15 years, sought to assuage its concerns regarding selling...
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