Opinion ID: 1004386
Heading Depth: 3
Heading Rank: 1

Heading: The $100,000 Preference

Text: Ms. Butner claims that $100,000 of the payments made by the debtor to her within one year prior to the filing of the bankruptcy peti- (5) that enables such creditor to receive more than such creditor would receive if— (A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of this title. 11 U.S.C. § 547(b). IN RE: JOHNSON BROTHERS TRUCKERS 7 tion are not avoidable because they constituted repayment of a $100,000 loan and are protected by the ordinary course of business exception of § 547(c)(2).2 Section 547(c) provides the unsecured creditor several shields with which it can defend against the trustee’s avoidance power. Advo, 37 F.3d at 1045. One such shield, found in § 547(c)(2), is known as the ordinary course of business exception which applies when the creditor can establish that: (1) the underlying debt on which payment was made was incurred by the debtor in the ordinary course of business or financial affairs of the debtor and creditor; (2) the transfer was made in the ordinary course of business or financial affairs of the debtor and creditor; and (3) the transfer was made according to ordinary business terms. In re Jeffrey Bigelow Design Group, Inc., 956 F.2d 479, 486 (4th Cir. 1992) (citing 11 U.S.C. § 547(c)(2)). The ordinary course of business exception operates as an affirmative defense. The recipient of such a payment has the burden of proving by a preponderance of the evidence that each payment falls within § 547(c)(2). See 11 U.S.C. § 547(g); Advo, 37 F.3d at 1047; see also A.W. & Assoc., Inc. v. Florida Mining and Materials, 136 F.3d 1439, 1441 (11th Cir. 1998); Logan v. Basic Distribution Corp., 957 F.2d 239, 242 (6th Cir. 1992). The Bankruptcy Code fails to define either ordinary course of business or according to ordinary business terms. The legislative history states simply that the purpose of [the ordinary course of business] exception is to leave undisturbed normal financial relations, 2 (c) The trustee may not avoid under this section a transfer —