IN THE MATTER OF: TOLONA PIZZA PRODUCTS CORPORATION, Debtor-Appellant., 3 F.3d 1029

Summary

The debtor, who was a maker of pizzas, issued eight checks to the creditor, its sausage supplier, within 90 days before being thrown into bankruptcy by its creditors. The creditor had offered the debtor several weeks to pay the debt, but the debtor paid the creditor within a week. The debtor brought an adversary proceeding against the creditor to recover the eight payments as voidable preferences under 11 U.S.C.S. § 547. The bankruptcy judge entered a judgment in favor of the debtor, but the district court reversed the judgment. On appeal, the court ruled that there was an exception to 11 U.S.C.S. § 547 if the creditor could show that the debt had been incurred in the ordinary course of business of both parties, that the payment had been made and received in the ordinary course of their businesses, and that the payment had been made according to ordinary business terms. In affirming the district court's judgment, the court found the parties dealings were within the normal course of ...