Many pundits predicted that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) would limit small preference actions for recovery of less than $10,000 because they must be commenced only in the creditor's home jurisdiction. Unfortunately, this protection might not be available to preference defendants after all because of the way the bankruptcy venue statute is drafted. When a debtor or trustee satisfies all of the preference requirements, the burden shifts to the preference defendant to reduce or eliminate preference exposure. The BAPCPA version of Section 547(c)(2) retains the requirement that the indebtedness paid by the alleged preference was incurred in the ordinary course of business or financial affairs of the debtor and creditor. However, Section 547(c)(2) is now easier to prove because a creditor defending a preference action can prove either the subjective or objective portion of the defense, depending on which is supported by the facts of the case.
Preference Dynamic Duo II: Whatever Happened to the Small Preference Venue Li... Bruce Nathan Business Credit; May 2009; 111, 5;
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