Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 06 NOVEMBER 2026

"(Ordinary) Course Correction: A Preference Defense Win For Trade Creditors,"

Lowenstein Sandler LLP
Lowenstein Sandler LLP
Contributor
Lowenstein Sandler LLP

Lowenstein Sandler LLP

Lowenstein Sandler LLP is a national law firm with over 400 lawyers based in New York, Palo Alto,...

View firm profile
Explore more from Lowenstein Sandler LLP

Trade creditors achieved a significant victory in Center City Healthcare LLC v. Medline Industries Inc., where the Delaware District Court confirmed that pre-petition collection activity alone does not defeat the ordinary-course-of-business defense in preference claims. The court also validated the use of RMA industry data to prove the objective OCB defense, offering trade creditors clearer guidance on mitigating risk and defending against bankruptcy preference actions under Section 547 of the Bankruptcy Co

United StatesInsolvency/Bankruptcy/Re-Structuring
Bruce S. Nathan
Bruce S. Nathan
Michael Papandrea
Michael Papandrea
Jake Rauchberg
Jake Rauchberg

Trade creditors recently scored a major win from the U.S. District Court for the District of Delaware. In Center City Healthcare LLC v. Medline Industries Inc., the Delaware District Court upheld summary judgment for creditor-defendant Medline Industries Inc. In doing so, the district court confirmed that pre-petition collection activity alone does not defeat the objective, industry-based prong of the ordinary-course-of-business (OCB) defense. The decision is particularly notable, since it comes on the heels of another recent ruling by the Delaware Bankruptcy Court in FI Liquidating Trust v. C.H. Robinson Co. Inc. (In re Fred’s Inc), in which the court held that collection pressure resulted in the loss of the objective OCB defense.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

Section 363 Sales In Bankruptcy: What Businesses, Lenders, And Buyers Need To Know

When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism—a sale under Section 363 of the United States Bankruptcy Code. Understanding how Section 363 sales work can help business owners, lenders, investors, and prospective purchasers identify opportunities and avoid costly surprises in bankruptcy asset transactions.
United StatesInsolvency/Bankruptcy/Re-Structuring
Scarinci Hollenbeck LLC
Scarinci Hollenbeck LLC
Article

Quarterly Brief: What’s New, What’s Next Across Industries In Restructuring & Turnaround (Q2 2026)

Riveron's Q2 2026 Restructuring & Turnaround brief examines how companies across multiple industries are navigating elevated financial distress amid tighter credit conditions, rising debt maturities, and persistent operational pressures. The analysis explores sector-specific challenges from aerospace to retail, highlighting how management teams and lenders are addressing liquidity constraints and restructuring risks in an increasingly selective credit environment.
United StatesInsolvency/Bankruptcy/Re-Structuring
Riveron
Riveron
Article

The Secured Creditor’s Playbook For Section 363 Sales

Section 363 sales have become a routine feature of commercial bankruptcy cases, often determining recovery for secured creditors before a reorganization plan is even filed. Understanding the mechanics of credit bidding, adequate protection rights, and bid procedure negotiations can mean the difference between maximizing recovery and watching collateral sold under unfavorable terms.
United StatesInsolvency/Bankruptcy/Re-Structuring
Adams and Reese LLP
Adams and Reese LLP
Article

You Can’t Un-Ring The Bell (Or The Assignment): Bankruptcy Court Dismisses Chapter 11 Cases In Favor Of A Pending ABC Proceeding

In In re Nussbaum Lowinger LLP, the Bankruptcy Court for the Southern District of New York (the Court) dismissed Chapter 11 bankruptcy cases commenced by two law firms and did so in favor of their assignment for the benefit of creditors proceeding already pending in New York state court. This decision provides useful guidance for creditors, assignees, and debtors evaluating whether to move from a state law assignment for the benefit of creditors to a federal bankruptcy case.
United StatesInsolvency/Bankruptcy/Re-Structuring
Arnold & Porter
Arnold & Porter
Article

SDNY Bankruptcy Court Offers Further Direction On Default Interest And Fee Recovery

The Southern District of New York Bankruptcy Court's written decision in 1300 Desert Willow expands upon the Mako framework, clarifying when debtors can challenge an oversecured creditor's entitlement to post-petition default interest at contractual rates. The ruling narrows the application of the "fresh start" factor in single-asset real estate cases and addresses whether Section 506(b)'s reasonableness requirement applies to prepetition claim components, providing critical guidance for bankruptcy practiti
United StatesInsolvency/Bankruptcy/Re-Structuring
Benesch, Friedlander, Coplan & Aronoff LLP
Benesch, Friedlander, Coplan & Aronoff LLP
Article

Putting A Price On Summer Camp: Inside Simad’s $448M Bankruptcy Auction

Cole Schotz attorney Michael Sirota received an urgent early-morning call to file nearly 200 bankruptcy cases within 24 hours after the Shabseles brothers' real estate empire and summer camp network unexpectedly collapsed. With 20,000 children about to board buses for summer camp, the legal team faced the challenge of restructuring a complex web of entities while ensuring the camps could open on schedule.
United StatesInsolvency/Bankruptcy/Re-Structuring
Cole, Schotz, Meisel, Forman & Leonard
Cole, Schotz, Meisel, Forman & Leonard
Article

Maximizing Value Along The Fraudulent Transfer Chain: What Must Be Avoided, And Who Must Be Sued?

A Delaware bankruptcy court ruling clarifies that trustees can pursue subsequent transferees in fraudulent transfer cases without naming the initial transferee as a defendant, though they must still prove and avoid the initial transfer. This decision provides critical guidance for vendors and creditors who may face clawback exposure even when the original wrongdoer isn't sued directly.
United StatesInsolvency/Bankruptcy/Re-Structuring
Lowenstein Sandler LLP
Lowenstein Sandler LLP
Article

U.S. Government Backs Fair Use For AI Training In OpenAI Copyright Litigation

The U.S. government has filed a Statement of Interest of the United States of America under 28 U.S.C. § 517 in the Southern District of New York multidistrict litigation over OpenAI’s use of copyrighted works to train large language models. The filing appears to be the federal government’s first direct intervention in the wave of artificial intelligence (AI) training copyright cases, and it advises the court to treat model training (separate from use of AI to generate outputs) on copyrighted text standing alone as a highly transformative fair use under current law.
United StatesIntellectual Property
Lowenstein Sandler LLP
Lowenstein Sandler LLP
Article

SEC Approves NYSE And NYSE American $0.25 Minimum Trading Price Continued Listing Requirement

The New York Stock Exchange and NYSE American have adopted new continued listing requirements establishing a 25-cent minimum trading price threshold that will trigger immediate suspension and delisting proceedings upon a single-day breach, with no cure period available. With the rules taking effect July 1, 2027, companies trading near this threshold face critical decisions about reverse stock splits...
United StatesFinance and Banking
Lowenstein Sandler LLP
Lowenstein Sandler LLP
Article

Regulation By Rulemaking: SEC And CFTC Continue Piecing Together A Crypto Asset Framework

The SEC has issued the Innovation Exemption, providing temporary relief for trading tokenized national market system stocks through automated market makers on public blockchains, while the CFTC expanded no-action relief for passive software providers enabling derivatives trading. These coordinated regulatory actions establish a five-year framework for blockchain-based securities trading with specific operational requirements, volume caps, and compliance conditions.
United StatesFinance and Banking
Lowenstein Sandler LLP
Lowenstein Sandler LLP
Article

Billions At Risk: Hundreds Of New Domain Extensions Are Coming. Is Your Company Ready?

As ICANN prepares to launch hundreds of new domain extensions in 2026, companies face escalating cyber risks from domain-based attacks amplified by artificial intelligence. This comprehensive analysis examines how weak domain security enables costly fraud, business interruption, and brand impersonation, while providing actionable controls and contractual strategies to protect against the coming wave of exposure.
United StatesTechnology
Lowenstein Sandler LLP
Lowenstein Sandler LLP