Source: https://law.justia.com/codes/us/2016/title-11/chapter-5/subchapter-iii/sec.-547/
Timestamp: 2019-04-25 02:51:34+00:00

Document:
(9) if, in a case filed by a debtor whose debts are not primarily consumer debts, the aggregate value of all property that constitutes or is affected by such transfer is less than $5,000.
Preferences: The House amendment deletes from the category of transfers on account of antecedent debts which may be avoided under the preference rules, section 547(b)(2), the exception in the Senate amendment for taxes owed to governmental authorities. However, for purposes of the "ordinary course" exception to the preference rules contained in section 547(c)(2), the House amendment specifies that the 45-day period referred to in section 547(c)(2)(B) is to begin running, in the case of taxes from the last due date, including extensions, of the return with respect to which the tax payment was made.
Subsection (c) contains exceptions to the trustee's avoiding power. If a creditor can qualify under any one of the exceptions, then he is protected to that extent. If he can qualify under several, he is protected by each to the extent that he can qualify under each.
The first exception is for a transfer that was intended by all parties to be a contemporaneous exchange for new value, and was in fact substantially contemporaneous. Normally, a check is a credit transaction. However, for the purposes of this paragraph, a transfer involving a check is considered to be "intended to be contemporaneous", and if the check is presented for payment in the normal course of affairs, which the Uniform Commercial Code specifies as 30 days, U.C.C. §3–503(2)(a), that will amount to a transfer that is "in fact substantially contemporaneous."
The second exception protects transfers in the ordinary course of business (or of financial affairs, where a business is not involved) transfers. For the case of a consumer, the paragraph uses the phrase "financial affairs" to include such nonbusiness activities as payment of monthly utility bills. If the debt on account of which the transfer was made was incurred in the ordinary course of both the debtor and the transferee, if the transfer was made not later than 45 days after the debt was incurred, if the transfer itself was made in the ordinary course of both the debtor and the transferee, and if the transfer was made according to ordinary business terms, then the transfer is protected. The purpose of this exception is to leave undisturbed normal financial relations, because it does not detract from the general policy of the preference section to discourage unusual action by either the debtor or his creditors during the debtor's slide into bankruptcy.
Paragraph (5) codifies the improvement in position test, and thereby overrules such cases as DuBay v. Williams, 417 F.2d 1277 (C.A.9, 1966), and Grain Merchants of Indiana, Inc. v. Union Bank and Savings Co., 408 F.2d 209 (C.A.7, 1969). A creditor with a security interest in a floating mass, such as inventory or accounts receivable, is subject to preference attack to the extent he improves his position during the 90-day period before bankruptcy. The test is a two-point test, and requires determination of the secured creditor's position 90 days before the petition and on the date of the petition. If new value was first given after 90 days before the case, the date on which it was first given substitutes for the 90-day point.
Subsection (e) determines when a transfer is made for the purposes of the preference section. Paragraph (1) defines when a transfer is perfected. For real property, a transfer is perfected when it is valid against a bona fide purchaser. For personal property and fixtures, a transfer is perfected when it is valid against a creditor on a simple contract that obtains a judicial lien after the transfer is perfected. "Simple contract" as used here is derived from Bankruptcy Act §60a(4) [section 96(a)(4) of former title 11]. Paragraph (2) specifies that a transfer is made when it takes effect between the transferor and the transferee if it is perfected at or within 10 days after that time. Otherwise, it is made when the transfer is perfected. If it is not perfected before the commencement of the case, it is made immediately before the commencement of the case. Paragraph (3) specifies that a transfer is not made until the debtor has acquired rights in the property transferred. This provision, more than any other in the section, overrules DuBay and Grain Merchants, and in combination with subsection (b)(2), overrules In re King-Porter Co., 446 F.2d 722 (5th Cir. 1971).
2005—Subsec. (b). Pub. L. 109–8, §1213(a)(1), substituted "subsections (c) and (i)" for "subsection (c)" in introductory provisions.
"(C) made according to ordinary business terms;".
Subsec. (c)(3)(B). Pub. L. 109–8, §1222, substituted "30 days" for "20 days".
"(B) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support; or".
Subsec. (c)(9). Pub. L. 109–8, §409(2), (3), added par. (9).
Subsec. (e)(2). Pub. L. 109–8, §403, substituted "30" for "10" wherever appearing.
Subsec. (h). Pub. L. 109–8, §201(b), added subsec. (h).
Subsec. (i). Pub. L. 109–8, §1213(a)(2), added subsec. (i).
1994—Subsec. (c)(3)(B). Pub. L. 103–394, §203(1), substituted "20" for "10".
Subsec. (c)(7), (8). Pub. L. 103–394, §304(f), added par. (7) and redesignated former par. (7) as (8).
Subsec. (e)(2)(A). Pub. L. 103–394, §203(2), inserted before semicolon at end ", except as provided in subsection (c)(3)(B)".
1986—Subsec. (b)(4)(B). Pub. L. 99–554 inserted "and" after the semicolon.
1984—Subsec. (a)(2). Pub. L. 98–353, §462(a)(1), inserted "including proceeds of such property," after "law,".
Subsec. (a)(4). Pub. L. 98–353, §462(a)(2), struck out ", without penalty" after "any extension", and inserted "without penalty" after "payable".
Subsec. (b). Pub. L. 98–353, §462(b)(1), substituted "of an interest of the debtor in property" for "of property of the debtor" in provisions preceding par. (1).
"(ii) had reasonable cause to believe the debtor was insolvent at the time of such transfer; and".
Subsec. (c)(2)(A). Pub. L. 98–353, §462(d)(1), inserted "by the debtor" after "incurred".
Subsec. (c)(2)(B) to (D). Pub. L. 98–353, §462(c), struck out subpar. (B) which read as follows: "made not later than 45 days after such debt was incurred;" and redesignated subpars. (C) and (D) as (B) and (C), respectively.
Subsec. (c)(3). Pub. L. 98–353, §462(d)(2), substituted "that creates" for "of".
Subsec. (c)(3)(B). Pub. L. 98–353, §462(d)(3), inserted "on or" after "perfected", and substituted "the debtor receives possession of such property" for "such security interest attaches".
Subsec. (c)(5). Pub. L. 98–353, §462(d)(4), substituted "that creates" for "of", and "all security interests" for "all security interest".
Subsec. (c)(5)(A)(ii). Pub. L. 98–353, §462(d)(5), substituted "or" for "and".
Subsec. (c)(7). Pub. L. 98–353, §310(3), added par. (7).
Subsec. (d). Pub. L. 98–353, §462(e), substituted "The" for "A" before "trustee may avoid", inserted "an interest in" after "transfer of", inserted "to or for the benefit of a surety" after "transferred", and inserted "such" after "reimbursement of".
Subsec. (e)(2)(C)(i). Pub. L. 98–353, §462(f), substituted "or" for "and".
Subsec. (g). Pub. L. 98–353, §462(g), added subsec. (g).
Pub. L. 109–8, title XII, §1213(b), Apr. 20, 2005, 119 Stat. 195, provided that: "The amendments made by this section [amending this section] shall apply to any case that is pending or commenced on or after the date of enactment of this Act [Apr. 20, 2005]."
By notice dated Feb. 16, 2016, 81 F.R. 8748, effective Apr. 1, 2016, in subsec. (c)(9), dollar amount "6,225" was adjusted to "6,425". See notice of the Judicial Conference of the United States set out as a note under section 104 of this title.
By notice dated Feb. 12, 2013, 78 F.R. 12089, effective Apr. 1, 2013, in subsec. (c)(9), dollar amount "5,850" was adjusted to "6,225".
By notice dated Feb. 19, 2010, 75 F.R. 8747, effective Apr. 1, 2010, in subsec. (c)(9), dollar amount "5,475" was adjusted to "5,850".
By notice dated Feb. 7, 2007, 72 F.R. 7082, effective Apr. 1, 2007, in subsec. (c)(9), dollar amount "5,000" was adjusted to "5,475".

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