Assist Leading Firearms Manufacturer to Defeat $3M Preference Action
In the Chapter 11 bankruptcy involving debtor and firearms distributor ASPC Corp. (fka AcuSport), the Trustee of the ASPC Creditor Trust (“Trustee”) brought this adversary proceeding to recover transfers exceeding $3 million made by AcuSport during the preference period to one of its suppliers, firearms manufacturer Sturm Ruger & Company, Inc. (“Ruger”). Kegler Brown represented Ruger and obtained summary judgment in Ruger’s favor as to all counts after briefing and argument.
The matter is notable for producing a published opinion (658 B.R. 455) providing important guidance to debtors, creditors, and preference litigation practitioners on the “objective” ordinary course of business defense found in §547(c)(2). Although the Trustee argued that Ruger changed the credit limits it applied to AcuSport during the preference period, the Court found that, even assuming that were true, Ruger could still avail itself of the “ordinary business terms” prong of the defense by showing, as Ruger did, that the timing of payments made by AcuSport to Ruger during the preference period were ordinary within the relevant industry. The decision also clarifies that preference defendants have latitude in defining the “relevant industry” for purposes of the ordinary course defense, and Ruger’s expert’s focus on the creditor’s industry was appropriate.
The opinion granting summary judgment to Ruger has received significant attention among bankruptcy practitioners nationwide. See, for example: Ohio Bankruptcy Court Offers Guidance on (the Amended) Ordinary Course Payment Preference Defense | Insights | Jones Day
Pidcock v. Sturm Ruger & Co. (In re ASPC Corp.), 658 B.R. 455 | Casetext Search + Citator
