Changing Credit Terms On The Eve Of Bankruptcy

Law360, New York (October 4, 2007, 12:00 AM EDT) -- Two recently issued decisions may make it more difficult for a preference defendant to establish the ordinary course of business defense when the defendant revises credit terms with a customer having financial difficulty on the eve of the customer’s bankruptcy.

As background, a preference includes, among other things, a payment from a debtor to a creditor within 90 days of the filing of a bankruptcy petition that allows one creditor to be in a better financial position with regard to the debtor than other similarly situated...
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