Dooley v. Luxfer MEL Technologies, No. 20-6005 (8th Cir. 2020)
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Luxfer appealed the bankruptcy court's decision that payments to Luxfer were not protected by the ordinary course of business defense to a preference action.
The Bankruptcy Appellate Panel held that it cannot make the determination of whether the bankruptcy court properly determined that preference payments did not qualify for the ordinary course of business defense without additional explanation from the bankruptcy court. Therefore, the panel remanded this matter to the bankruptcy court to set forth the method by which it adopted 47 days as the ordinary course cut-off or, alternatively, determine which preferential transfers were made in the ordinary course. Furthermore, the court held that the adversary complaint seeks not only avoidance of preferential transfers under Bankruptcy Code section 547, but also recovery under Bankruptcy Code section 550. In this case, the bankruptcy court did not address recovery under section 550, and the panel remanded for the bankruptcy court to do so.
Court Description: [Schermer, Author, with Saladino, Chief Judge, and Sanberg, Bankruptcy Judge] Bankruptcy Appellate Panel. Based on the bankruptcy court's decision in the matter , the panel cannot determine whether the bankruptcy court erred in determining that payments to Luxfer were not protected by the ordinary course of business defense to a preference action; remanded to the bankruptcy court to set forth the method by which it adopted 47 days as the ordinary course cut-off or, alternatively, determine which preferences were made in the ordinary course; in addition, the adversary complaint seeks not only avoidance of the preferential transfers under Bankruptcy Code Sec. 547, but the court's decision did not address recovery under that section; on remand, the bankruptcy court should determine the Trustee's entitlement to recovery under Sec. 550. [ August 06, 2020 ]
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