Document: 502 U.S. 151 112 S.Ct. 527 116 L.Ed.2d 514 UNION BANK, Petitionerv.Herbert WOLAS, Chapter 7 Trustee for the Estate of ZZZZ Best Co., Inc. No. 90-1491. Argued Nov. 5, 1991. Decided Dec. 11, Syllabus During 90-day period preceding its filing a petition under Bankruptcy Code, (Debtor) made two interest payments and paid loan commitment fee on long-term debt to petitioner, Union Bank (Bank). After he was appointed trustee Debtor's estate, respondent Wolas filed complaint against recover those as voidable preferences 11 U.S.C. § 547(b). The Court held that were transfers in ordinary course business pursuant 547(c)(2) thus excepted from District affirmed, but Appeals reversed, holding exception not available creditors. Held: 1. Payments debt, well short-term may qualify trustee's power avoid preferential transfers. Section contains no language distinguishing between long- and, therefore, provides support Wolas' contention coverage extends only debt. Moreover, 547's relevant history part supports, is otherwise inconsistent with, literal reading statute. While 547(c)(2), originally enacted, limited within 45 days date incurred, Congress amended provision 1984 by deleting time limitation entirely. That have intended address particular concerns specific creditors amendment or foreseen all consequences statutory enactment insufficient reason refusing give effect 547(c)(2)'s plain meaning. Also unpersuasive argument enacted codify judicially crafted "current expense" rule covering contemporaneous exchanges new value, since other 547(c) exceptions occupy some (if all) territory previously covered rule, there extrinsic evidence 547(c)(2). Nor does fact exception's availability directly further underlying policy equality distribution among limiting it provision's deterring racing courthouse dismember debtor indirectly equal goal well. Pp. 154-162. 2. question whether correctly concluded remains open remand. P.162. 921 F.2d 968 (CA9 1990), reversed remanded. STEVENS, J., delivered opinion unanimous Court. SCALIA, concurring opinion. John A. Graham, Los Angeles, Cal., petitioner; Lesley Anne Hawes, Donald Robert Meyer, Stephen Howard Weiss, brief. Herbert Wolas, South Pasadena, respondent. Justice STEVENS 1 547(b) 547(b), authorizes certain property 90 before bankruptcy. Code makes an exception, however, business, presented exception. 2 On December 17, 1986, borrowed seven million dollars (Bank).1 July 8, 1987, Debtor voluntary Code. period, had totalling approximately $100,000 about $2,500 Bank. his appointment 3 found loans been "in financial affairs" both Bank, payment according terms business.2 As matter law, satisfied requirements therefore avoidable trustee.3 affirmed Court's summary judgment favor Bank.4 4 Shortly thereafter, another case, avoidance In re CHG International, Inc., 897 1479 1990). reaching conclusion, relied primarily policies preference provisions state law prior 1978 1984. Thus, Ninth Circuit concluded, dictated reversal this case. 968, 969 (1990).5 importance decided Circuit, coupled with Sixth interpreted contrary manner, Finn, 909 903 (1990), persuaded us grant Bank's certiorari. 500 ----, 111 2009, 114 97 (1991). 5 * We shall discuss 547 after examining text. subsection (b), broadly authorized bankruptcy trustees "avoid any transfer property" if five conditions are unless one defined (c) applicable.6 brief, characteristics (1) benefit creditor; (2) be account antecedent debt; (3) while insolvent; (4) bankruptcy; (5) enable creditor receive larger share estate than made. also presumed insolvent during 547(f). undisputed foregoing (c)(2). 6 most significant feature (c)(2) case absence debt.7 provides: "The section transfer— 8 . 9 "(2) extent such was— 10 "(A) incurred affairs transferee; "(B) 12 "(C) terms." 13 Instead focusing term which made, focuses "ordinary transferee. text respondent's commercial paper trade Given clarity text, burden persuading create preserve special exceptionally heavy. United States v. Ron Pair Enterprises, 489 235, 241-242, 109 1026, 1030-1031, 103 290 (1989). did relies provision. II 14 chapters, clearly second when overhauled Nation's laws. For purposes original version differed respect current version: contained apply incurred.8 presumably excluded exception.9 repealed 45-day substitute comparable limitation. See Amendments Federal Judgeship Act 1984, Pub.L. 98-353, 462(c), 98 Stat. 333, 378. 15 Respondent contends satisfy complaints issuers paper10 creditors11 regularly extended credit periods more days. Furthermore, continues, legislative make conventional lenders. Therefore, argues, we should follow analysis read protecting payments. Cf. F.2d, at 1484. 16 need dispute accuracy description order reject conclusion. even adopted redress problems creditors, true redressed entirely sufficient Toibb Radloff, 501 2197, 115 145 17 earlier specifically include business.12 courts had, developed what sometimes described cover situations debtor's eve diminish net because tangible assets obtained exchange payment. Marshall Florida National Jacksonville, 380, 382 (CA5 1940); Collier ¶ 60.23, p. 873 (14th ed. 1977). Without suppliers necessary goods services might reluctant extend required advance instead, making difficult many companies temporary distress remained business. argues construe confines expense rule. 18 This compelling several reasons. First, means clear construed analogue explicitly value.13 Those has directed our attention suggesting 547(c)(2).14 19 significantly narrower today. To establish Act, prove challenged "reasonable cause believe [was] insolvent." 96(b) (1976 ed.). When rewrote substantially enlarged eliminating reasonable requirement creating presumption insolvency period. §§ (c)(2), (f); H.R.Rep. 95-595, 178 (1977), U.S.Code Cong. & Admin.News 1978, pp. 5787, 6138. At same time, created "leave undisturbed normal relations, detract general discourage unusual action either slide into bankruptcy." 373, 6329. 20 light these substantial changes provision, assume justification narrowly confining Instead, carefully reexamined supports conclusion reflects deliberate choice Congress.15 III 21 agree serve basic fairly House Committee Report. explained: 22 "A enables greater percentage claim would received participated bankrupt estate. purpose two-fold. permitting prebankruptcy occur short bankruptcy, discouraged protection afforded often him work way out situation through cooperation Second, important, facilitate prime debtor. Any others class disgorge so equally. operation deter 'the race diligence' furthers section—that distribution." Id., 177-178, 6137, 23 comment demonstrates, independent. hand, tends payee over conflict treatment. "race courthouse" enabling struggling continue operating 24 places primary emphasis, Appeals, distribution. 1483-1485. insolvent, necessarily impairs claims unsecured undersecured By authorizing transfers, empowers restore status returned distributed 25 But text—which distinction debt—precludes divorces favoring discouraging Long-term seek head start race. accept Appeals' treatment, must recognize Report recognized, Whether wisely balanced conflicting decide. IV 26 sum, hold express opinion, particular, do decide involved terms. These questions remain 27 remanded proceedings consistent 28 It ordered. 29 concurring. 30 I join Court, including Parts III, respond persuasively legislative-history arguments regrettable legal culture addressed (and indeed credited Appeals), statute utterly devoid could remotely thought distinguish Since here "scrivener's error" producing absurd result, litigation unnecessary unmaintainable. executed revolving agreement 16, agreed lend $7 accordance promissory note Debtor. 87-13692 (Bkrtcy.Ct. CD Aug. 22, 1988), App. Pet. Cert. 12a. principal sum million. provided payable monthly basis accrue balance rate .65% per annum excess reference rate. Ibid. 14a. 88-6285, 1989 WL 263387, U.S.Dist. LEXIS 17500, *1 (CD 4, 1989). holding, rejected line "long-term" less year. (1990). Because applies "Except section, property— "(1) owed made; "(3) "(4) made— petition; ninety year petition, insider; "(5) if— chapter title; title." definitional defines "debt" "liability claim," 101(11), provided, part: later incurred; "(D) 92 2549, 2598 (1978) (Emphasis added). use "presumably" protected initial Iowa Premium Service 695 1109 (CA8 1982) (en banc) (holding obligations "incurred" they become due, rather signed). refer "most" instead "all" possibility purchaser assured avoided maturity less. Commercial complained lowered demand Hearings Subcommittee Judicial Machinery Senate Judiciary, 96th Cong., 2d Sess., 8-27 (1980) (statements George Van Cleave, partner, Goldman, Sachs James Ledinsky, Senior Vice President, A.G. Becker Co.). Trade stated industries exceeded arbitrary deprived See, e.g., Reform Courts 97th 1st 259-260 (1981) (statement Vyto Gestautas behalf Association Credit Management). 60 1898 codified 96 ed.), "(a)(1) A transfer, title, suffered four months initiating proceeding will obtain class. "(b) receiving benefited thereby agent acting thereto has, insolvent. Where voidable, property. ." example, 547(c)(1) exempts "contemporaneous value given debtor," 547(c)(4) "to that, gave fact, apparently mention Broome, Long-Term Debt Voidable Preferences: Impact Amendments, 1987 Duke L.J. 78, 97. Indeed, concludes discussion powers observation "hopelessly complex" "subject varying interpretations. bill undoes numerous amendments heaped past 40 years, proposes unified coherent deal transfers." 179 6139. Respondent's assumption pre-existing war history.

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