Consolidated fgh liquidating trust
The question pits the Federal Arbitration Act,(21) which serves to move disputes covered by an arbitration agreement from the courts to arbitration, against the Bankruptcy Code, which centralises disputes involving a debtor in the bankruptcy court.The standard for resolving this statutory conflict is found in the Supreme Court case , which holds that for a party to successfully challenge a valid arbitration provision, it must demonstrate that either the claims arose under a statute that overrides the provisions of the Federal Arbitration Act or an "irreconcilable conflict" exists between arbitration and the substantive statute's "underlying purposes".(22) Therefore, in bankruptcy, courts have to consider whether enforcing an arbitration clause as required by the Federal Arbitration Act would jeopardise the underlying purposes of the Bankruptcy Code.(23) At a descriptive level, disputes that are peripheral to bankruptcy are more likely to be arbitrated, while disputes that affect the outcome of the bankruptcy are more likely to be retained by the courts.
Here are some examples of how courts analyzed the defense: An arguably reliable method for comparing pre-preference payments and preferential period payments is to calculate the standard deviation in the payments. Instead, the defense only applies to value provided after a given payment at issue. Thus, after each payment, the creditor must find applicable value provided at a latter point in time and any new value provided prior to the payment does not apply. The elements of the defense are that the transfer/payment was: (1) in the payment of a debt incurred by the debtor in the “ordinary course of business”; and (2) made either in the ordinary course of business of the debtor and creditor or according to ordinary business terms defined by the parties‟ industry standards. This analysis would take similar form to the ordinary course of business between the parties, but taking an industry-wide perspective at whether the payment practices at issue comport with the standard of the industry. In re Loretto Winery (9th Cir.), In re Gulf City Seafoods, Inc. To establish the amount and applicability of this defense, it is not sufficient for the creditor to simply add up the value of the goods or services provided on a non-secured basis during the 90-day period and deduct that amount from the amount of money paid to the creditor during the 90-day period. Ordinary Course of Business Defense The “ordinary course of business” defense sounds fairly simple and straight forward but the manner in which it is applied by courts and trustees can be complicated and sometimes counter-intuitive. See also In re The Consolidated FGH Liquidating Trust, (S. Finally, even if the preferential transfers do not fall within the ordinary course of business between the parties, they may have been made according to the ordinary business terms in the industry. This inquiry is more objective, comparing the credit arrangements between other similarly situated debtors and creditors in the industry to see whether the payment practices at issue are “consistent” with the industry practice. Rather, “„ordinary business terms‟ refers to the range of terms that encompasses the practices in which firms similar in some general way to the creditor in question engage, and that only dealings so idiosyncratic as to fall outside that broad range should be deemed extraordinary and therefore outside the scope of subsection C.” In re Tolona Pizza Products Corp. Conversely, the very image of the United States in the international business community stands to be tarnished." More recently, however, US bankruptcy courts have treated international arbitration with less deference, applying the same principles that govern enforcement of domestic arbitration agreements.(11)The Second Circuit's 1999 decision in court balanced bankruptcy policy against the policy favouring international arbitration.It discussed the tensions between the centralising theme of bankruptcy and arbitration's contrary impulse and recognised that this can present a conflict of "polar extremes".(13) However, the Second Circuit did not display the same reverence for international comity as cases such as .