4/3/2023 0 Comments Preferential treatment llcSome cases require the subsequent advance to remain unpaid while others do not. In situations where there is an ongoing credit relationship, the analysis as to deliveries and application of payments can be quite complicated. Another useful defense is the subsequent advance of unsecured credit following receipt of the payment. Determination as to ordinary course generally requires an analysis of the credit relationship between the parties for an extended period. Although the term ordinary course of business is not defined in the Bankruptcy Code, case law is reasonably clear as to its meaning. If the payments are received in the ordinary course of business, the trustee cannot require repayment. This is probably the most useful defense. For example, one case held that a lien granted in exchange for a loan may be substantially contemporaneous even though the lien was not perfected for 16 days. This is a flexible concept calling for a case by case inquiry.
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