Eugene I. Davis, as Litigation Trustee for the Que v. Clarklift-West, Inc. dba Clarklift Teampower

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------x
In re: 	Chapter 11
Quebecor World (USA), Inc., et al.,
Debtors. 	Case No. 08-10152 (JMP)
(Jointly Administered)
--------------------------------------------------------------x
Eugene I. Davis, as Litigation Trustee for the
Quebecor World Litigation Trust, 	Adv. Pro. No. 10-1568 (SHL)
Plaintiff,
v.
Clarklift-West, Inc. dba Clarklift Team Power,
Defendant.
---------------------------------------------------------------x
MEMORANDUM OF DECISION GRANTING MOTION FOR SUMMARY JUDGMENT
A P P E A R A N C E S:
ASK LLP
Counsel for Eugene I. Davis, as Litigation Trustee for the Quebecor World Litigation Trust
2600 Eagan Woods Drive, Suite 400
St. Paul, MN 55121
By: 	Joseph L. Steinfeld, Jr.
Kara E. Casteel
-and-
151 West 46th Street, 4th Floor
New York, NY 10035
By: 	Edward E. Neiger
Marianna Udem
THE BIEGLER LAW FIRM
Counsel for Clarklift-West, Inc. dba Clarklift Team Power
725 University Ave
Sacramento, CA 95825
By: 	Robert P. Biegler
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 1 of 13

- 2 -
SEAN H. LANE
UNITED STATES BANKRUPTCY JUDGE
Before the Court is a motion for summary judgment filed by Plaintiff Eugene I. Davis,
Litigation Trustee for the Quebecor World Litigation Trust (the “Trustee”). The Trustee asserts
that ten transfers totaling $69,207.60 by the debtors to the defendant Clarklift-West, Inc.
(“Clarklift”), shortly before the filing of the bankruptcy case, are preferences under Section
547(b) of the Bankruptcy Code (the “Code”). After accounting for undisputed defenses, the
Trustee seeks the return of $35,865.58 in preference payments to the estate. Clarklift does not
dispute that these transfers are preferences but it asserts the “ordinary course of business”
defense under Section 547(c)(2) to exempt these transfers from recovery by the Trustee. For the
reasons set forth below, the Court rejects Clarklift’s ordinary course of business defense and
grants the Trustee’s motion for summary judgment. 1
BACKGROUND
There are no disputed material facts. On January 21, 2008 (the “Petition Date”), the
Debtor filed for protection under Chapter 11 of the Code. On May 18, 2009, the Debtor filed its
Third Amended Joint Plan of Reorganization of Quebecor World (USA), Inc. and Certain
Affiliated Debtors and Debtors-In-Possession (the “Plan”). In June of 2009, the Plan was
1 	Because this Court is adjudicating a motion for summary judgment, it addresses whether it has the
constitutional authority to issue a final decision in this case consistent with Stern v. Marshall, 131 S.Ct. 2594, 2620
(2011) (holding that a bankruptcy court “lacked the constitutional authority to enter a final judgment on a state law
counterclaim that is not resolved in the process of ruling on a creditor's proof of claim.”). Clarklift filed proofs of
claim. [Dkt. 1999 at 17 (claim 9254 filed May 7, 2009, and claim 9255 filed May 7, 2009)]. The Trustee’s
preference claims would necessarily be resolved in ruling on the Defendant's proofs of claim as a result of Section
502(d) of the Bankruptcy Code, which provides that “the court shall disallow any claim of any entity ... that is a
transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549, or 724(a) of this title, unless
such entity or transferee has paid the amount, or turned over any such property, for which such entity or transferee is
liable under section 522(i), 542, 543, 550, or 553 of this title.” 11 U.S.C. § 502(d). Having subjected itself to this
Court by filing proofs of claim, the Court has the constitutional authority to issue a final judgment in this
action. See In re Tronox Inc., 503 B.R. 239, 344-45 (Bankr. S.D.N.Y. 2013) (citing Katchen v. Landy, 382 U.S. 323
(1966) and Langenkamp v. Culp, 498 U.S. 42 (1990)); see also Davis v. R.A. Brooks Trucking Co. (In re Quebecor
World (USA), Inc.), 491 B.R. 379, 384 (Bankr. S.D.N.Y. 2013).
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 2 of 13

- 3 -
confirmed. Pursuant to the Plan, a litigation trust administered by the Trustee was created to
pursue certain claims as defined under the terms of the Plan.
The Debtor and the Defendant have a history of business dealings reaching back to at
least 2005. Davis Decl. ¶¶ 18-19; Ex. E [ECF No. 41]. The Defendant was in the business of
heavy equipment sales, rental, and service. Davis Decl. ¶¶ 18-19; Ex. I. During the 90 days
before the Petition Date (the “Preference Period”),3 the Debtors made—and the Defendant
received—ten (10) transfers totaling $69,207.60 (the “Transfers”). Davis Decl. ¶ 7; Ex. A, Ex.
B, Ex. C. These Transfers were made by check from the Debtors’ corporate bank account. Id. at
¶ 8, Ex. B. At the time the Transfers were made, the Defendant was a creditor of the Debtors and
all payments were made on account of antecedent debts. Def.’s Resp. to Statement of
Undisputed Facts ¶¶ 16-17. By receiving full payment for these debts, Clarklift acknowledges
that it recovered more than it would have in a hypothetical Chapter 7 liquidation because the
Plan calls for general unsecured creditors to receive less than 100 cents on the dollar. Id. at
¶¶ 19-20. Pursuant to Section 547(f), the Debtors are presumed to have been insolvent during
the Preference Period.
The Trustee concedes that $30,514.18 of these Transfers is not subject to avoidance
under the “new value exception” of Section 547(c)(4) of the Code. See Hr’g Tr. 16:10-19, Feb.
20, 2014 [ECF No. 50]. The Trustee also concedes that another $3,372 qualifies under the
ordinary course of business exception of Section 547(c)(2). Id. at 17:2-5. After accounting for
these reductions, the Trustee seeks the return of $35,321.23 as preference payments, along with
pre-judgment interest. Id. at 22.
DISCUSSION
I. 	Summary Judgment Standard
3 	The parties agree that the Preference Period was from October 23, 2007, to January 21, 2008.
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 3 of 13

- 4 -
It is appropriate for the Court to grant summary judgment “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see Fed. R.
Civ. P. 56(c) (made applicable to the adversary proceeding by Fed. R. Bankr. P. 7056). A
genuine dispute of material fact exists when “the evidence is such that a reasonable jury could
return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 244
(1986).
The moving party bears the burden of demonstrating the absence of any genuine dispute
of material fact, and all inferences to be drawn from the underlying facts must be viewed in the
light most favorable to the party opposing the motion. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255-57; Ames Dep’t Stores, Inc. v. Wertheim Schroder & Co., Inc. (In re Ames Dep’t
Stores, Inc.), 161 B.R. 87, 89 (Bankr. S.D.N.Y. 1993). Thus, the moving party bears the initial
burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate
the absence of a genuine dispute of material fact. See Celotex, 477 U.S. at 323. Once the
moving party meets this initial burden, the non-moving party must “go beyond the pleadings and
by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file”
to demonstrate a genuine issue of fact. Id. at 324. A court should grant the motion if “the
record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party.”
Bundy Am. Corp. v. Blankfort (In re Blankfort), 217 B.R. 138, 143 (Bankr. S.D.N.Y. 1998)
(citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
II. Preferential Transfers and the Ordinary Course of Business Defense
To avoid a transfer as preferential under Section 547(b), the Trustee must establish five
elements. The transfer must have been made:
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 4 of 13

- 5 -
(1) 	to or for the benefit of a creditor;
(2) 	for or on account of an antecedent debt owed by the debtor before such
Transfers were made;
(3) 	made while the debtor was insolvent;
(4) 	on or within ninety (90) days before the date of filing of the petition; and
(5) 	enable the benefited creditor to receive more than such creditor would
have received had the case been a chapter 7 liquidation and the creditor
not received the transfer.
11 U.S.C. § 547(b).
Clarklift concedes that all five elements have been satisfied here and, therefore, the
Transfers qualify as preferential. See Def.’s Resp. to Statement of Undisputed Material Facts
¶¶ 13-20 [ECF No. 5045]. Clarklift nonetheless asserts that the $35,321.23 sought by the
Trustee is not avoidable because it is exempted under the ordinary course of business defense of
Section 547(c)(2). That section provides that a transfer shall not be avoided:
(2) 	to the extent that such transfer was in payment of a debt incurred by the
debtor in the ordinary course of business or financial affairs of the debtor
and the transferee, and such transfer was —
(A) 	made in the ordinary course of business or financial affairs of the
debtor and the transferee; or
(B) 	made according to ordinary business terms.
11 U.S.C. § 547(c)(2).
The ordinary course of business defense generally protects “recurring, customary
credit transactions that are incurred and paid in the ordinary course of business of the
debtor and the debtor's transferee.” Official Comm. of Unsecured Creditors of Enron
Corp. v. Martin (In re Enron Creditors Recovery Corp.), 376 B.R. 442, 459 (Bankr.
S.D.N.Y. 2007) (quoting Sender v. Heggland Family Trust (In re Hedged-Investments
Assocs.), 48 F.3d 470, 475 (10th Cir. 1995)). The policy behind the defense is to “leave
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 5 of 13

- 6 -
undisturbed normal financial relations, because it does not detract from the general policy
of the preference section to discourage unusual action by either the debtor or [its]
creditors during the debtor's slide into bankruptcy." Lawson v. Ford Motor Co. (In re
Roblin Indus., Inc.), 78 F.3d 30, 41 (2d Cir. 1996) (quoting H. Rep. No. 95-595 (1977),
reprinted in 1978 U.S.C.C.A.N. 5963, 6329).
Prior to the 2005 BAPCPA Amendments, a defendant was required to prove both
elements of Section 547(c)(2) to establish the ordinary course of business defense.
Today, however, the test is a disjunctive one. Thus, a defendant can prevail by
demonstrating either the “subjective” test of Section 547(c)(2)(A) or the “objective” test
of Section 547(c)(2)(B). See Jacobs v. Gramercy Jewelry Mfg. Corp. (In re M. Fabrikant
& Sons, Inc.), Adv. No. 08-1690, 2010 WL 4622449, at *2 (Bankr. S.D.N.Y. Nov. 4,
2010). Clarklift here only invokes Subsection (A), which is the “subjective element that
requires an examination of whether a transfer was ordinary between the parties to the
transfer.” Daly v. Radulesco (In re Carrozzella & Richardson), 247 B.R. 595, 603 (2d
Cir. BAP 2000) (citations omitted). A defendant bears the burden of proving this defense
by a preponderance of the evidence. 11 U.S.C. § 547(g)(2).
To determine what is ordinary under Subsection (A), the first step is to establish
an historic baseline period as a point of comparison. See In re Fabrikant, 2010 WL
4622449, at *3; see also In re Quebecor World (USA), Inc. (Davis v. R.A. Brooks
Trucking Co.), 491 B.R. 379, 386 (Bankr. S.D.N.Y. 2013); In re Sparrer Sausage Co.
Inc., BR No. 12 B 04289, 2014 WL 4258103 (citing In re of Tolona Pizza Prod. (In re
Tolona), 3 F.3d 1029, 1033 (7th Cir. 1993)). “The starting point—and often ending
point—involves consideration of the average time of payment after the issuance of the
invoice during the pre-preference and post-preference periods, the so-called 'average
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 6 of 13

- 7 -
lateness' computation theory.” In re Fabrikant, 2010 WL 4622449, at *3. Courts suggest
examining a period of time “well before” the preference period to establish the baseline.
See Fiber Lite Corp. v. Molded Acoustical Prods. (In re Molded Acoustical Prods., Inc.),
18 F.3d 217, 223 (3d Cir. 1993) (citing In re Tolona, 3 F.3d at 1032). This is to reduce
the likelihood that the debtor’s financial difficulties had already taken hold during the
historical period and thus distort otherwise “ordinary” practices under regular financial
conditions. See In re Sparrer Sausage Co. Inc., 2014 WL 4528103, at *1.
“Once a baseline is established, the next step is to compare the average time it
took the debtor to pay an invoice during the baseline period [with] the time it took the
debtor to pay invoices in the preference period.” Id. at *2. “Generally, this involves a
comparison of the average number of days between the invoice and payment dates during
the pre-preference and preference periods.” In re Fabrikant, 2010 WL 4622449, at *4;
see also In re Sparrer Sausage Co. Inc., 2014 WL 4528103, at *2. Although a narrow
band of difference is acceptable, payments delayed beyond a reasonable amount of time
past the pre-preference period average generally do not fall within the ordinary course of
business under Section 547(c)(2)(A). See In re Fabrikant, 2010 WL 4622449, at *3;
Davis v. All Points Packaging & Distrib., Inc. (In re Quebecor World (USA), Inc.), 491
B.R. 363, 370 (Bankr. S.D.N.Y. 2013), aff’d, and adopted sub nom., 13 CIV. 3395 KBF,
2013 WL 6233905 (S.D.N.Y. Nov. 25, 2013). In In re Fabrikant, for example, the court
rejected the argument that any payment is ordinary if it falls anywhere within the
minimum and maximum number of days from invoice to payment during the historical
period. In re Fabrikant, 2010 WL 4622449, at *4. Rather than using a total range as the
measure of “ordinary,” bankruptcy courts instead “compar[e] of the average number of
days between the invoice and payment dates during the pre-preference and preference
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 7 of 13

- 8 -
periods” when analyzing a creditor’s ordinary course of business defense. In re
Quebecor World (USA), Inc, 491 B.R. at 386; In re Fabrikant, 2010 WL 4622449, at *3;
Hassett v. Altai, Inc. (In re CIS Corp.), 214 B.R. 108, 120 (Bankr. S.D.N.Y. 1997).
When a preference period payment falls beyond the pre-preference mean, therefore,
courts typically find that the payment was made outside the ordinary course of business
and thus not protected by Section 547(c)(2). In re Quebecor World (USA), Inc, 491 B.R.
at 386; In re Fabrikant, 2010 WL 4622449, at *3; In re CIS Corp., 214 B.R. at 120.
Payments of this sort are presumptively non-ordinary unless the defendant can establish
that such late payments were the standard course of dealing between the parties. See In
re Fabrikant, 2010 WL 4622449, at *3; see also In re Tolona, 3 F.3d at 1032.
III. Clarklift’s Ordinary Course of Business Defense
Applying the methodology above to analyze the parties’ payment history, the
Defendant’s ordinary course of business defense comes up short. The Trustee has
analyzed the parties’ payment history, including approximately 533 transfers during the
historical period—October 26, 2005, through October 17, 2007—and approximately 82
transfers during the 90-day Preference Period. Davis Decl., Ex. D; Ex. E. During the
historical period of their business relationship, for example, 83% of payments to Clarklift
were made between 45 and 65 days past the invoice date. Davis Decl., Ex. D; Ex. F.
During the Preference Period, however, less than six percent of payments were made
during this period. Id. By contrast, over 70% of payments during the Preference Period
were made between 76 and 85 days. Not surprisingly then, the weighted average time to
payment increased from 50.29 days in the historical period to 77.79 days during the
Preference Period. This represents a shift of 27.5 days, or 55%. As 99.97% of
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 8 of 13

- 9 -
Preference Period payments were made beyond 60 days, effectively none of these
payments were transferred on or around the historical 50-day mean. Id.
Courts frequently have held that such a substantial shift in weighted average time
to payment negates a defendant’s ordinary course of business defense. See, e.g., Off.
Plan Comm. v. Expeditors Int'l of Wash., Inc. (In re Gateway Pac. Corp.), 153 F.3d 915,
918 (8th Cir. 1998) (payments not ordinary when there is a 19-day difference between the
time to payment during the historical period and preference period); Official Comm. of
Unsecured Creditors v. CRST, Inc. (In re CGG 1355, Inc.), 276 B.R. 377, 383-84 (Bankr.
D.N.J. 2002) (not ordinary when payments made, on average, 89.50 days after the
invoice date during the preference period compared to an average of 66.47 days during
the parties' four-year business relationship and 73.44 days during the last full year of the
relationship) [23-day and 16-day difference]); In re CIS Corp., 214 B.R. at 120
(payments not ordinary where paid, on average 51 days after the due date during the pre-
preference period and 80 days after the due date during the preference period) [29 day
difference]).
Clarklift does not dispute the accuracy of these figures nor does it contest the
methodology used to derive them. Clarklift instead cites In re Central Valley Processing,
Inc., 360 B.R. 676 (Bankr. E.D. Cal. 2007), for the proposition that “a 33% to 50%
variance in the timeliness of the payment of invoices did not take said transaction(s) out
of the ‘ordinary course of business.’” Def.’s Opp’n 6:24-7:1. But Central Valley is
distinguishable. Among other factors, the court in Central Valley expressly relied upon
“the intervention of the Thanksgiving holiday just prior to the issuance” of the payments.
In re Central Valley, 360 B.R. at 679. More specifically, the court took “judicial notice
of the fact that in 2002 [the preference period year] Thanksgiving was on November 28.
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 9 of 13

- 10 -
The check for payment was written on the following Monday, December 2, and the
intervention of that holiday weekend may well have been a factor . . . .” Id. at 679. Such
a holiday would account for four or five days out of the ten-to-fifteen day delay in
payment at issue in the case, a significant percentage. See id. (payments at issue were
made 10-15 days later than 30 days specified in customer invoices). Given the lack of
such unique facts here, the Court is not persuaded that Central Valley provides support
for Clarklift’s ordinary course of business defense. See also id. at 677-79 (identifying
other problems regarding how the trustee measured the time of payment).
Clarklift also cites to the factors identified in Buchwald Capital Advisors LLC v.
Metl-Span I., Ltd. (In re Pameco Corp.), 356 B.R. 327, 340 (Bankr. S.D.N.Y. 2006), and
argues that the majority of those factors support an ordinary course of business defense
here. In Pameco, the court identified several factors to consider, including “(i) the prior
course of dealing between the parties, (ii) the amount of the payment, (iii) the timing of
the payment, (iv) the circumstances of the payment, (v) the presence of unusual debt
collection practices, and (vi) changes in the means of payment. Id. at 340-41; see also
Official Comm. of Unsecured Creditors of 360networks (USA) Inc. v. U.S. Relocation
Servs. (In re 360networks (USA) Inc.), 338 B.R. 194, 210 (Bankr. S.D.N.Y. 2005).
Citing these factors, Clarklift argues that the parties’ Preference Period conduct was
consistent with their historical dealings, the amount of the payments did not vary
substantially, the circumstances of the payments remained the same, there were no
unusual debt collection practices, and that the means of payment remained the same
during the Preference Period. Biegler Decl. ¶¶ 7-11.
But the Defendant’s reliance on Pameco fails for several reasons. First,
Clarklift’s reading of Pameco is inconsistent with this Circuit’s jurisprudence. No case in
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 10 of 13

- 11 -
this Circuit has simply counted the number of factors identified in Pameco that favor
each side as a dispositive formula to determine whether a payment was nonordinary.
Instead, courts have articulated that late payments alone are “presumptively nonordinary”
and that this presumption may be rebutted only though showing that such late payments
“were the standard course of dealing between the parties.” In re Fabrikant, 2010 WL
4622449, at *3 (quoting 5 Collier ¶ 504.04[2] [ii], at 547-55; In re Tolona, 3 F.3d at
1032). The focus on the lateness of the payments was recognized by the Pameco court.
See In re Pameco Corp., 356 B.R. at 340 (“[a]dditionally, payments substantially delayed
beyond the due date are not in the ordinary course of business”). So while courts have
weighed multiple factors in determining whether the ordinary course of business defense
protects a transfer, the existence of some favorable factors identified in Pameco does not
necessarily compensate for a large shift in mean time to payment.
Second, Clarklift’s application of the Pameco factors is flawed. While Clarklift
cites the first four Pameco factors, it does nothing to establish how these factors favor
Clarklift in this case. Def.’s Opp. to Pl.’s Mot. for Summ. J., 5:25-6:19 [ECF No. 42]
(citing only to Trustee’s exhibits). Indeed, the first four factors in Pameco relate in large
part to the number and timing of payments. As such, these factors are captured in large
measure by the Trustee’s extensive analysis of the payment history between the parties.
Davis Decl. Ex. E. For the reasons stated above, that payment history does not establish
an ordinary course of business defense because it reveals a significant change in the
average lateness for payments in the historical period when compared with the Preference
Period.
Clarklift fares little better as to the remaining two Pameco factors. Clarklift cites
a lack of creditor pressure—Pameco factor five—but that factor does not necessarily
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 11 of 13

- 12 -
negate a substantial shift in the mean time to payment. “Making payments in response to
creditor pressure can often be indicative of transactions out of the ordinary course. But
the absence of such creditor pressure, while of course failing to support an out of the
ordinary course finding for that reason, does not otherwise establish the opposite.” Ames
Merch. Corp. v. Cellmark Paper Inc. (In re Ames Dep’t Stores, Inc.), 450 B.R. 24, 33
(Bankr. S.D.N.Y. 2011), aff’d, 470 B.R. 280 (S.D.N.Y. 2012), aff’d, 506 Fed. App’x. 70
(2d Cir. 2012). Similarly, consistency in the manner of payment—Pameco factor six—
does not render a payment ordinary when it is accompanied by a noticeable change in
payment timing. In re Fabrikant, 2010 WL 4622449, at *3-4. In short, the existence of
two Pameco factors here simply does not overcome the significant increase in average
payment time during the Preference Period.
Clarklift submits only one piece of evidence on its behalf: a letter from Quebecor
to its suppliers. The letter notes, among other things, that Quebecor “look[s] forward to
maintaining [its] business relationship with you.” Def.’s Opp’n; Ex. 1, ¶ 5. This letter,
however, appears to have been sent out to all of Quebecor’s suppliers, not just the
Defendant, and does not mention any specific details pertaining to Quebecor’s business
relationship with Clarklift. See id. The document is addressed generically to “Quebecor
World Supplier” and does not reference Clarklift at any point in the letter. Id. For all
these reasons, the letter does not support Clarklift’s defense.
In sum, the Court rejects Clarklift’s ordinary course of business defense, given the
undisputed and significant difference in the timing of payments during the historical
period and the Preference Period. Nothing in Clarklift’s exhibits establishes that late
payments of the magnitude described above constituted the “standard course of dealing
between the parties.” See Biegler Decl., Ex. 1 [ECF No. 44]; see In re Fabrikant, 2010
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 12 of 13

- 13 -
WL 4622449, at *3. As such, the Defendant has failed to come forward with evidence
sufficient to raise a material issue of fact on the ordinary course of business defense.
IV. Pre-Judgment Interest
Under Section 547 of the Code, Courts have the discretion to grant pre-judgment interest.
In re Pameco Corp., 356 B.R. at 342. Section 550(a) of the Code allows the Plaintiff to recover
the value of property transferred under Section 547. Section 550 serves to restore the estate to
the full value of the asset transferred to the creditor. In re L & T Steel Fabricators, Inc., 102
B.R. 511, 521 (Bankr. M.D. La. 1989). This value includes interest on the preference payments.
Id. Pre-judgment interest is not a penalty to the creditor. Rather, it compensates the estate for
the time value of money it would have earned had the transfer not taken place. Therefore, the
Court grants the Trustee’s request for interest, which was $544.34 as of the date of filing the
motion.
CONCLUSION
For the reasons above, the Court grants the Plaintiff’s motion for summary judgment.
The estate is entitled to recover $35,865.58, together with applicable interest. The Plaintiff shall
submit an order on three days’ notice.
IT IS SO ORDERED.
Dated: New York, New York
October 14, 2014
/s/ Sean H. Lane
UNITED STATES BANKRUPTCY JUDGE
10-01568-shl Doc 51 Filed 10/14/14 Entered 10/14/14 17:46:53 Main Document
Pg 13 of 13