Another Win for the Trade on the Subjective Ordinary Course of Business Preference Defense Despite Persistent Requests for Payment

Preference claims are a trade creditor’s worst nightmare. It’s bad enough to be left with a potentially uncollectable claim against a bankrupt customer; it’s insult to injury to also have to turn over payments received from the customer in the 90 days before its bankruptcy. Fortunately, creditors can assert defenses to preference claims, including the ordinary course of business, or OCB, defense. While increased collection efforts may negate a creditor’s OCB defense, the Delaware bankruptcy court in re Diversified Mercury Communications, LLC recently held that a creditor satisfied the OCB defense even though it had persistently sent several email requests to collect its claim!