this is an appeal from the apartments by the united states district court for the southern district of indiana a final judgment by the united states bankruptcy court for the southern district indiana holding that payments from one star long distance to m c i could not have been avoided as preferential transfers under section five forty seven b due to m c i so subsequent new value to france on december thirty first two thousand and three three creditors of one star had filed an involuntary petition for bankruptcy against one star and one  had been a reseller of telecommunications services purchasing wholesale telecommunications services from providers such as for rising and m c i and reselling them to retail customers and during the ninety days prior to the filing of the involuntary petition  paid just under two point five million dollars to m c i including five hundred seventy one thousand dollars due on notes made in conjunction with payments under payment plans for long overdue services and one point nine million dollars for invoice s of more recent services during october november and a portion of december of two thousand and three and c i had supplied telecommunications services to one start under various services agreement but on december twenty second two thousand and three one star m c i and i said that and affiliate of one star entered into an assignment assumption agreement which provided among other things that one star waived its rights to receive further telecommunications services from m c i and that all pre assignment obligations where does your argument leave the cr so as a result of the payments m c i was paid one hundred cents on the dollar of the invoices that were paid by those preferential payments as it stands right now generally secured creditors are receiving zero dividend the services to one star at a markup that had been found to be up to seventy seven point two percent well in excess of the the industry average markup of ten to twelve percent that was found by the one star examiner provided during october november and december prior to the assignment agreement and the lower courts have found that that was a complete defense the trustee disputes this the new value was paid by the assignment entry into the assignment agreement as a result once of the assignment and one star released any claims that it had against m c i to receive further services under the telecommunications services affecting the one star state additionally m c i was no longer it knowledge that it was no longer owed any any funds as a result of the assignment agreement and furthermore  the lower courts erred when they found that that a per d m average could be used to determine how much any on any particular day was which provided a new value of services  one point there were records showing a daily provision of services those records were lost at some point and so the lower courts just simply took an average and said well after the december payments totaling three hundred thousand dollars we will just apply an average because that's the best that we have we believe that was inappropriate given the fact that among other things m c i at one point had the ability to determine that and it was m c i is burden to  prove that they did not meet that burden of proof agreement extinguished the debt my understanding is that it was not in fact extinguished it was transferred and still that's one star i'm still know that's that's where i have trouble using the word effectively because of course horizon didn't get a penny as a result of this transfer so why does one treat nonpayment as while you're are as a result of entering into this transaction the estate was made worse off and so therefore maybe the trustee could seek to undo that transaction but your argument is that this transfer is the same as payment and my question is why for the purpose of five forty seven c for nonpayment would ever be treated as payment to a worse treatment seventy seven point two percent markup by an affiliate so that was only for the last week of the preference period there had been substantial extensions of service that  unpainted during october november and the first three weeks of december that is correct your honor however the parties had no way of knowing when in fact bankruptcy was going that involuntary petition was going to be filed so you know if it happened in january or february we still would have been dealt with this issue and it would have been a longer period of time it just so happens that it had occurred nine days prior to the involuntary petition being filed right but the fight is about all the services that were provided turning i told by november and the first three weeks of december that remained unpaid and whether that offsets the preferential payments that were made during that period and they substantially offset your honor no did no determination was made as to the value that was you know what how what the value of the payment here clearly there must have been some value otherwise and so i would not have required one star to enter into this transaction one star could have gone through the procedures to terminate under the various services agreement it chose not to it chose to have one star assigned its rights that provided that must provide services under the various telecommunications services agreement here m c i was apparently losing money under this contract and wanted to get out of it that was worth something i to go ahead and assign those contra act rights have one stark assigned those contract rights to ice that but for that assignment and so i would have continued to have been exposed to further credit risk  contend that it paid all of the obligations that were covered under under this contract however that finding was not made and that would be something that would have been m c i spurn to show what payment are you referring to i'm referring debt well it it this this whole transaction arises out of the services agreements and the amounts are road so if there was a payment made it must have been made on the obligations that preexisted at the time it had not disconnected at the time and and so presumably was continuing to to provide services it could have just disconnected it chose not to the fact that it shows not to suggest that there was some value to m c i that was being offered as your case come down to trying to get back what million nine hundred thousand dollars from m c i in order to give to the unsecured credit payments totaling an aggregate three hundred thousand dollars in december one was one group of famous was for one hundred thousand and one was for two hundred thousand on december ninth and december seventeenth of two thousand and three there were five days of services  payments from one star to m c i so and one star was continuing to make payments on under the payment plans and open accounts and so three hundred thousand dollars in december of two thousand and three was made to trustee contends that still three hundred thousand dollars should be avoided and recovered that would be the three hundred thousand dollars in that were paid in december of two thousand and three because no new value was shown to have been provided after those payments the lower courts used a per d m determination to say well there was one point seven million dollars of new value provided in december we don't know when it was provided it could have been provided at the beginning of the month they could have been provided all you know on the descent between december seventeenth summer twenty second no one knows there was no no evidence conclusively shown the course just said we'll take the average we believe that it's inappropriate here where the the evidence had at one point existed but had been lost by m c i it was there and to show how much new value they provided after those two sets of payments and as a result that even if the new value did not remain what's the radically wrong with the m approach well in this instance we don't know how at what services were being provided i know that services were provided during the course of the entire month we don't know that your honor we know that we have an invoice that says for december there was an amount provided it doesn't say on december thirty first here all of the calls that were made right but some of some of the charges were fixed and others who are variable and those that were variable or provided continuously on a card by card basis family and those services it can reasonably be assumed were provided throughout the course of the entire month and so that pretty a method of taking the monthly total and dividing it by thirty one days is a reasonable way to measure your honor it at the time as ever searching was filed such as evidence existed to show exactly how much would have been provided on a particular day there were call logs yes some of it was fixed and so one might extrapolate that and say ok the fixed charges are for a particular period of time however no one knows how much the variable services were on any particular date today or at the time of the trial that i'm not hearing a real theoretical objection to using this methodology it sounds like you're just arguing that because the evidence once existed to provide an actual amount and see i should be foreclosed from using this method is that what your argument is i think that that is i think that would be a reasonable result but also we don't know how much the variable amounts were in any particular date more upright that's why the more kristie is the pretty a method but that's just a statement of the obvious you're not really objecting to this method as a theoretical don't know on to say december second what how much was provided for says on on december seventeenth or eighteenth right that's just a statement of the obvious that's that's why the more courts use the producer method of calculating which is a perfectly reasonable way and i don't hear you objecting to requires a transfer of property from the debtor to the creditor and there's no allegation whatsoever that any property interest was transferred so on the face of it i think there are government fails right there they make some machinations about what effect it might have had on m c i from transferring it substituting the parties which is all that really happened that i said about that that they required the services agreement which it then resold to one star so one star's operations really weren't materially affected there was no payment of any kind to m c i all this was was an assignment of debt so now the debt was held by someone else but there was no payment well what about these unsecured the arguments have gone on for twelve years primarily there was lawsuits against insiders who pilfered a lot of money from the state and in the last proceeding as brought against the unrelated party which was acquired later by horizon so the outcome will be based on what other assets have been recovered in the case that the trustee reports which i think are part of the record indicate that the administrative claims will consume a large part of this which is because the case is still open but the important thing for this adversary proceeding as where the those creditors benefited or harmed by the actions taken in this ninety day period between verizon and the debtor and they clearly benefited the estate and therefore the creditors  dollars greater than the payments that were made back so the debt that was owed to rise it actually increased by two and a half million which is contrary to the policy that the preference action was set up to the case to what happened to this since rosen was a preexisting creditor from its own business dealings with the debtor also has a claim but the importance is that the state from which the creditors were going to be paid and will be paid was enhanced rather than diminished or the other so you're saying a bankruptcy proceeding just isn't oh no it's still pending for a very long period of time and that's why a large amount of this will actually go to the administrative creditors or if there was to be a recovery because those are primarily professionals or rendered services during the case so even if this was to be recovered i don't know that there could be a promise that unsecured creditors would still receive anything it would be greater but the important part is the preference statute was passed so that the creditor would receive a disproportionate share of the assets and therefore deprive the distribution unsecured creditors and what happened here is a precisely the opposite rising gave it more than it got so and that's the purpose of five forty seven seas exception recognizing the new value because it's to incentivize a creditor like arisan to continue to advance unsecured credit to give that debtor a chance to avoid bankruptcy which would otherwise arise from a liquidity concern of creditors so i'll have to give back any payments i'm not going to advance you more credit and if we went through the provisions of the assignment which was discussed in a summary the application of five forty seven c to b which is the limitation on the exception arising from a payment on account of  on the phone a pretty in peace i think the issue that was raised there is well monthly bill are simply be consigned to losing any type of invited defense because they would never be able to establish company i believe in two thousand and six and had the records such as they were those records would have had raw data on calls but there's no evidence it contained all the evidence necessary to establish what the value was that would be applied in this and i'm not aware of any case to the contrary that rejects t variety of payments that were paid within the invoice trends which as a matter of law should be ordinary so though that should be affirmed simply as a matter of law so on that basis we ask that us your honor i'm not sure i follow the case the banks case is still open and this adversary proceeding has to be resolved before the case we closed as well as there would be terminations on claims that have been filed on paid right now in the case chapter eleven administrative claims were paid in full and i believe chapter seven administrative expenses have been paid to date as well but you had these   that will have to be determined as a result of this absolute proceeding as well as any other claims reconciliation that might occur if the if if the trustee were successful  courts were first the trustee was able to recover the one point nine million dollars i expect that there would be a distribution of general unsecured creditors or in addition to i believe there are some priority tax claims that remain unpaid as well provided through the services under the under the telecommunications services agreements that the trustee disputes whether those services remained unpaid would that which is the rule under at the prescott