U.S. Bankruptcy Court, WDNY
Ordinary Course of Business
In re Grace Manor Health Care Facility Inc.
Background: A Chapter 7 trustee sought to recover the alleged preferential payments made on account of four invoices resulting from the purchase of pharmaceuticals. The defendant responded that the transfers occurred in the ordinary course of business and were exempt from recovery. Both parties moved for summary judgment. The defendant argued that the agreement should define the ordinary course of business, while the trustee argued that there was no prior history of business with the debtor and therefore the defendant could not establish the existence of an ordinary course of business.
Ruling: The court granted summary judgment for the defendant. The court held that the negotiated terms of the agreement were ordinary for a business operating in receivership. Specifically, the parties understood that the debtor operated in receivership and that the parties could anticipate a final payment after the termination of the business.
Mark J. Schlant of Zdarsky, Sawicki & Agostinelli LLP for the trustee; Kevin Tompsett of Harris Beach PLLC for Buffalo Pharmacies Inc.