Union Bank v. Herbert Wolas, Chapter 7 Trustee for the Estate of ZZZZ Best Co., Inc. (502 U.S. 151)
U.S. Supreme Court · decided December 11, 1991 · Supreme Court Database (Spaeth)
- Citation
- 502 U.S. 151 · 112 S. Ct. 527
- Decided
- December 11, 1991
- Term
- October Term 1991
- Vote
- 9–0
- Majority author
- Justice Stevens
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Stevens delivered the opinion of the Court. Section 547(b) of the Bankruptcy Code, 11 U. S. C. § 547(b), authorizes a trustee to avoid certain property transfers made by a debtor within 90 days before bankruptcy. The Code makes an exception, however, for transfers made in the ordinary course of business, § 547(c)(2). The question presented is whether payments on long-term debt may qualify for that exception. On December 17,1986, ZZZZ Best Co., Inc. (Debtor), borrowed $7 million from petitioner, Union Bank (Bank). On July 8, 1987, the Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code. During the preceding 90-day period, the Debtor had made two interest payments totaling approximately $100,000 and had paid a loan commitment fee of about $2,500 to the Bank. After his appointment as trustee of the Debtor’s estate, respondent filed a complaint against the Bank to recover those payments pursuant to § 547(b). The Bankruptcy Court found that the loans had been made “in the ordinary course of business or financial affairs” of both the Debtor and the Bank, and that both interest payments as well as the payment of the loan commitment fee had been made according to ordinary business terms and in the ordinary course of business. As a matter of law, the Bankruptcy Court concluded that the payments satisfied the requirements of § 547(c)(2) and therefore were…
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