U.S. Bank National Ass'n v. Plains Marketing Canada LP (In re Renew Energy LLC)
463 B.R. 475
Bankr. W.D. Wis.2011Background
- Renew Energy LLC filed chapter 11 on January 20, 2009; trustee was appointed to administer remaining assets including preference claims.
- The trustee sued Plains Marketing Canada for roughly $808,000 under §547(b) during the 90 days preceding bankruptcy.
- Contracts 954 and 955 were long-running forward-type agreements for natural gasoline; Contract 1060 was a short-term purchase contract.
- Payments during the preference period were largely 7–26 days after invoice; pre-period payments averaged 18 days late, while preference-period payments averaged 15 days late.
- Court awarded summary judgment for Plains on 954 and 955, holding them were forward contracts and their payments were settlement payments under §546(e).
- The ordinary-course and new-value defenses remained unresolved for Contract 1060, with factual questions about its treatment and any new value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether payments under Contracts 954 and 955 are settlement payments under §546(e). | Plains is a forward contract merchant; payments are settlement payments. | Contracts 954/955 qualify as forward contracts and are settlement payments; 1060 is not a forward contract. | Yes; 954 and 955 are forward contracts and payments are settlement payments under §546(e). |
| Whether Contract 1060 payments fall within ordinary-course defense under §547(c)(2). | Analyze debtor– Plains payment practices; similar timing indicates ordinary course. | Past practices show minor variation; insufficient evidence on Contract 1060; issue exists for trial. | There is a genuine issue of material fact; summary judgment denied for 1060 under §547(c)(2). |
| Whether Plains may use the new value defense under §547(c)(4) for Contract 1060. | New value may offset the preferential transfer if additional unsecured credit was extended. | Evidence insufficient to prove new value; need more proof of deliveries and connection to Contract 1060. | No; Plains has not established the new value defense for Contract 1060. |
Key Cases Cited
- In re Enron Creditors Recovery Corp., 422 B.R. 423 (S.D.N.Y. 2009) (settlement payments generally arise at the maturity of a financial instrument)
- Mirant Corp., 310 B.R. 548 (Bankr.N.D. Tex. 2004) (definition of maturity date; forward contracts may have multiple maturity dates)
- MBS Management, 432 B.R. 570 (Bankr.E.D. La. 2010) (forward-contract hedging attributes evidenced by expert testimony)
- National Gas Distributors, 369 B.R. 884 (Bankr.E.D.N.C. 2007) (distinguishing forward contracts from ordinary supply contracts)
- Tolona Pizza Prods. Corp., 3 F.3d 1029 (7th Cir. 1993) (factors for ordinary course of business analysis under §547(c)(2))
- In re Xonics Imaging Inc., 837 F.2d 763 (7th Cir. 1988) (considerations for ordinary course payments and pre/post-preference timing)