Official Committee of Unsecured Creditors of Affinity Health Care Management, Inc. v. Wellner (In re Affinity Health Care, Management, Inc.), 499 B.R. 246

Debtors filed Chapter 11 in Oct 2008; Committee and reorganized Debtors seek to avoid and recover transfers under §§ 544, 547(b), 548, 550 from Murray Wellner and Mass Mutual.
Affinity Health Care Management and related Debtors operated four Connecticut SNFs; Affinity managed operations and billing under a unified cash management system.
From 2005, Wellner advanced unsecured loans to Affinity using accounts under his control; loans were informal with no set terms and no formal promissory notes.
In 2008-2009 Affinity executed backdated promissory notes and other writings to reflect losses to Wellner; notes were prepared for divorce proceedings and signed by Affinity as a favor.
Two challenged transfers within 90 days of bankruptcy: a $200,000 check and a $10,000 interest payment, deposited into Wellner’s accounts, in Sept 2008; Plaintiffs seek recovery of at least $210,000 on Fourth Cause of Action.
Plaintiffs contend transfers were preferential to an insider; Defendant asserts defenses under § 547(c)(2).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Insolvency status at transfer time	Plaintiffs show debtor insolvent; presumption under 547(f) rebuttable but not overcome by Def.	Affinity schedules suggest solvency; Dalicandro affidavit not credible to rebut presumption.	Plaintiffs established insolvency for purposes of § 547(b)(3).
Transfer to or for the benefit of a creditor	Two checks paid to Wellner as creditor; amounts reflect repayment of debt.	Transfers went to Wellner but funds deposited in various accounts; argues not a direct recipient.	Transfers were to the creditor (Wellner) and thus may be avoided.
Transfer on account of an antecedent debt	Loans from Wellner to Affinity and interest payments form antecedent debts.	Dalicandro notes suggest different intended allocations; conflicts in accounting.	Transfers were on account of antecedent debts.
Timing of transfers (within 90 days/insider within a year)	Transfers occurred within 90 days of petition and involved an insider.	Argues ordinary course defenses and offset timing issues.	All elements satisfied within § 547(b)(5).
Ordinary course defense under § 547(c)(2)(A)	Debt/transfer not ordinary; loans irregular and not arm’s-length.	Asserted as ordinary course; claims the debts arose in ordinary dealings.	Defendant failed to prove the two-prong ordinary course defense; § 547(c)(2) not available.

In re Roblin Industries, Inc., 78 F.3d 30 (2d Cir. 1996) (presumption of insolvency and going-concern value framework for solvency)
In re Finley, Rumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, 130 F.3d 52 (2d Cir. 1997) (ordinary-course inquiry and debt-creation analysis in § 547(c)(2))
Toy King Distribs. v. Liberty Sav. Bank, FSB, 256 B.R. 1 (Bankr.M.D.Fla. 2000) (solicited guidance on ordinary-course and debt-creation considerations in preference actions)