Many trade creditors are familiar with the well-known defenses to preference claims, including the subsequent new value and the ordinary course of business defenses. However, trade creditors that are counterparties to certain categories of commodity contracts and financial contracts are entitled to the very unique protections arising under the "safe harbor" provisions of the Bankruptcy Code. If these safe harbor provisions are applicable to a trade creditor's transactions with its customer, the creditor has an absolute defense against preference liability. The US Bankruptcy Court for the Western District of Wisconsin, in US Bank National Association v. Plains Marketing Canada LP (In re Renew Energy LLC), recently ruled that a supplier of physically delivered natural gasoline was entitled to utilize the safe harbor defense to reduce a substantial amount of its preference liability because two of the supplier's contracts with the debtor were "forward contracts" within the meaning of the Bankruptcy Code, and the transactions otherwise satisfied the requirements of the safe harbor defense.
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