Page:United States Reports 502 OCT. TERM 1991.pdf/311

 502us1$13Z 08-21-96 15:26:37 PAGES OPINPGT

Cite as: 502 U. S. 151 (1991)

153

Opinion of the Court

July 8, 1987, the Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code. During the preceding 90-day period, the Debtor had made two interest payments totaling approximately $100,000 and had paid a loan commitment fee of about $2,500 to the Bank. After his appointment as trustee of the Debtor’s estate, respondent filed a complaint against the Bank to recover those payments pursuant to § 547(b). The Bankruptcy Court found that the loans had been made “in the ordinary course of business or financial affairs” of both the Debtor and the Bank, and that both interest payments as well as the payment of the loan commitment fee had been made according to ordinary business terms and in the ordinary course of business.2 As a matter of law, the Bankruptcy Court concluded that the payments satisfied the requirements of § 547(c)(2) and therefore were not avoidable by the trustee.3 The District Court affirmed the Bankruptcy Court’s summary judgment in favor of the Bank.4 Shortly thereafter, in another case, the Court of Appeals held that the ordinary course of business exception to avoidance of preferential transfers was not available to long-term creditors. In re CHG Int’l, Inc., 897 F. 2d 1479 (CA9 1990). In reaching that conclusion, the Court of Appeals relied primarily on the policies underlying the voidable preference provisions and the state of the law prior to the enactment of the 1978 Bankruptcy Code and its amendment in 1984. a promissory note to be executed and delivered by the Debtor. No. 87– 13692 (Bkrtcy. Ct. CD Cal., Aug. 22, 1988), App. to Pet. for Cert. 12a. On December 17, 1986, the Debtor executed and delivered to the Bank a promissory note in the principal sum of $7 million. The promissory note provided that interest would be payable on a monthly basis and would accrue on the principal balance at a rate of 0.65% per annum in excess of the Bank’s reference rate. Ibid. 2 App. to Pet. for Cert. 14a. 3 Ibid. 4 In re ZZZZ Best Co., Inc., No. 88–6285, 1989 U. S. Dist. LEXIS 17500,
 * 1 (CD Cal., Aug. 4, 1989).