On June 4, 2013, Judge Mary F. Walrath entered partial summary judgment in favor of RPG Management, Inc. (“RPG”) on a complaint to avoid and recover preferential transfers filed by the trustee of the estates of NWL Holdings, Inc. (the “Trustee”). Prior to the petition date, RPG made insurance premium payments on behalf of the debtors for various insurance policies covering the debtors’ businesses. In return, the debtors made payments to RPG for ongoing and future insurance coverage. In Giuliano v. RPG Mgmt., Inc., June 4, 2013 (Case No. 10-53535-MFW), the Trustee sought to recover four premium payments made by the debtors to RPG in the total amount of $805,050 within the ninety days preceding the petition date (collectively, the “Payments”).
The Court held at the outset that the Trustee established a prima facie case under section 547(b) of the Bankruptcy Code and turned to RPG’s alleged 547(c) defenses. Specifically, RPG alleged that 547(c)(1)’s “contemporaneous new value” defense precludes the Trustee’s recovery of the Payments. In response the Trustee asserted that the transfers cannot be considered “contemporaneous” because the Payments were in fact late. Specifically, three of the four payments were made within a month of the time they became due and the fourth was made almost three months after the due date. The Court held that lateness does not necessarily equate to “not contemporaneous” for the purposes of 547(c) because, if that were so, section 547(c)(1) would be superfluous and unnecessary in light of section 547(b)’s antecedent debt element. The Court found that payments on account of insurance premiums are generally considered substantially contemporaneous if the payments were made within one month of their due date. In this case, three of the four transfers (totaling $792,100 of the $805,050 demand) fell within this range and therefore qualified as contemporaneous exchanges for new value under section 547(c)(1). Summary judgment was entered in favor of RPG on these transfers. The Court denied summary judgment on the fourth transfer, noting that while other factors may be considered to determine if the payment was substantially contemporaneous, such information was lacking in the record thereby creating an issue of material fact.
A copy of the Court’s opinion can be found here.