The Delaware Bankruptcy Court's Approach to the Subjective Prong of the Ordinary Course of Business Defense

(Excerpt) The ordinary course of business defense (the "OCB Defense") to preference claims under section 547(c)(2)(A) of title 11 of the United States Code (the "Bankruptcy Code") protects transfers that are consistent with previous transactions between a debtor and creditor. In evaluating this defense, the United States Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") conducts a fact-intensive inquiry into whether the challenged transfers were consistent with the parties’ previously established business practices. Key considerations include the length and regularity of the relationship, the timing and method of the transactions, and the absence of aggressive collection tactics or efforts to exploit the debtor’s financial decline. If the defendant can show that the transactions in question were sufficiently consistent with prior dealings, section 547(c) will shield the transfers from avoidance