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Average Lateness Methodology

BY Edward E. Neiger
February 28, 2015

Two recent decisions from the United States Bankruptcy Court for the Southern District of New York, Quebecor World Litigation Trust v. Clarklift-West, Inc. dba Clarklift Team Power (In re Quebecor World (USA), Inc.), 2014 WL 5292981 (Bankr. S.D.N.Y. Oct. 14, 2014) and Pereira v. United Parcel Service of America, Inc. (In re Waterford Wedgwood USA, Inc.), 508 B.R. 821 (Bankr. S.D.N.Y. 2014) affirmed the use of “average lateness” methodology to examine both the subjective and the objective components of the ordinary course of business defense to preference actions. This has significance in that average lateness methodology may now be employed to assess both independent prongs of the ordinary course of business defense.

Quebecor World Litigation Trust

In Quebecor World Litigation Trust v. Clarklift-West, Inc. dba Clarklift Team Power, the litigation trustee for the Quebecor World litigation trust sued Clarklift-West under Bankruptcy Code section 547 to avoid and recover payments the debtor made during the preference period. The defendant argued that the payments were not avoidable because they were made in the “ordinary course of business.” Bankruptcy Code section 547(c) states that payments made in the ordinary course of business are immune from avoidance. The trustee filed a motion for summary judgment.

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