Pereira v. United Parcel Service of America, Inc. (In re Waterford Wedgwood USA, Inc.), 508 B.R. 821

Waterford Wedgwood USA, Inc. and Royal Doulton USA, Inc. (the Debtors) filed Chapter 7; Trustee sued UPS entities to avoid preferential transfers made within 90 days before the petitions (approx. $897,546.85 from Waterford and $81,828.22 from Doulton).
Parties stipulated to basic facts: Debtors purchased shipping services from UPS, were invoiced, and paid by check; Debtors ceased operations and sold assets to a purchaser shortly before filing.
UPS conceded the payments were preferences but invoked 11 U.S.C. § 547(c)(2) defenses: (A) ordinary course of business (subjective) and (B) ordinary business terms (objective).
UPS presented corporate testimony and industry payment-data (Credit Risk Monitor) to show disputed payments fell within industry norms; Trustee critiqued the methodology and proposed using one standard deviation around the industry mean (30–54 days) instead of UPS’s broader range.
The Court found the Trustee established the elements of § 547(b); it ruled UPS prevailed in part under § 547(c)(2)(B) (ordinary business terms) but denied the defense to the full extent claimed and reserved ruling on § 547(c)(2)(A) pending further quantification and calculation of new-value offsets.
The Court awarded prejudgment interest on recoverable preferences to restore the estate to the time value of the transferred assets.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Were the payments avoidable preferences under § 547(b)?	Yes — payments within 90 days, antecedent debts, insolvency, improved position.	Did not contest elements.	Trustee satisfied § 547(b); transfers are prima facie preferences.
Do payments fall within § 547(c)(2)(B) (ordinary business terms)?	UPS’s industry-range analysis is overbroad and includes outliers; correct industry range is approx. 30–54 days.	Payments conformed to industry practice (UPS/peers DSO), argue broader permissible range (approx. 14–72 days).	Court: UPS wins in part under § 547(c)(2)(B); some transfers fall within ordinary business terms per adopted methodology (court adopted single standard deviation approach for analysis).
Do payments fall within § 547(c)(2)(A) (ordinary course between parties)?	Trustee: variations in party-specific payment history show deviations and some payments accelerated before sale.	UPS: subjective history is not required for objective § 547(c)(2)(B) defense; subjective test distinct and not necessary now.	Court reserved decision on § 547(c)(2)(A) until parties quantify amounts and new-value offsets; did not decide now.
Is prejudgment interest recoverable on avoided preferences?	Yes — to restore estate to full value/time value of money.	No meaningful dispute.	Court awarded prejudgment interest on recoverable preferences as equitable restoration of estate.

Roblin Indus., Inc. v. Ford Motor Co., 78 F.3d 30 (2d Cir. 1996) (interpreting “ordinary business terms” as industry-based objective test and cautioning against redundancy with subjective prong)
Tolona Pizza Prods. Corp. v. N. D. Prods., 3 F.3d 1029 (7th Cir. 1993) (objective industry-standard approach to ordinary business terms)
In re Carrozzella & Richardson, 247 B.R. 595 (2d Cir. BAP 2000) (describing subjective ordinary-course factors)
In re Gulf City Seafoods, 296 F.3d 363 (5th Cir. 2002) (warning courts not to impose a single norm and allowing industry variability)
General Motors Corp. v. Devex Corp., 461 U.S. 648 (1983) (prejudgment interest characterized as delayed damages component)
West Virginia v. United States, 479 U.S. 305 (1987) (discussion on awarding prejudgment interest)