June 23, 2018, Southern District of Texas – The Debtor, Brougher Inc, dba Forge USA, provided steel forging products and services online. The Defendant, our client, was engaged in the manufacturing of machinery and equipment for use in oil and gas fields. Our client had sold two ingots to the Debtor within the preferential period. The Plaintiff sought to recover preference transfers worth $ 70,500.00 from our client under Section 547 of the Bankruptcy Code
Upon analysis of documents and invoices, we established to the plaintiff that the alleged preference period payments were received before the shipment of the goods and thus, the alleged transfer was a pre-payment and cannot be avoided as a preference. As an alternative argument, we also established that our client had a strong 547 (c)(1) defense. The alleged transfer occurred a few days after the purchase order and a few days before the issuance of the invoices. Based on our research, we cited precedents and showed it to the plaintiff that a few days difference in days is acceptable for a 547 (c)(1) defense.
Based on our arguments and defenses, the plaintiff dismissed the case for no costs.