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Defenses to a Bankruptcy Trustee's Preference Claim
Carolinas AGC Weekly Bulletin - 5/14/98
Brian K. Fielden

A trustee can recover certain payments made by a bankrupt entity within 90 days prior to a bankruptcy filing as "preferences." In this article, Mr. Fielden discusses two exceptions to a bankruptcy trustee's power to recover preference claims. These exceptions are known as the "ordinary course of business" exception and the "contemporaneous exchange for new value" exception. Although the focus of the article is on using these defenses in the construction industry, these defenses apply in the commercial industry as well.