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benefit of the investors due to SphinX's alleged fraud. Such an argument required the resolution of a matter not properly before the bankruptcy court. Because the court held that the investors were not parties in interest with standing to object to the settlement, it affirmed the bankruptcy court and further held that, without standing to object, the investors lacked standing to appeal. Additionally, the Second Circuit held that the liquidators lacked standing to object and/or appeal because they stood in the shoes of SphinX which consented to the settlement order in the first instance.
* Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 505 F.3d. 775
(9th Cir. Sept. 2007) (Brunetti, J.) The new and improved ordinary course defense is "even easier to prove." After deciding that the bankruptcy court had jurisdiction over pre-trial matters, defendant's Seventh Amendment right to a jury trial notwithstanding, the Ninth Circuit reversed the bankruptcy court's order granting summary judgment in favor of the debtor. Because the defendant had raised trial issues of fact with regard to the regular business practices between the parties and the regular practices in the industry, the Ninth Circuit found that the bankruptcy court erred in rejecting the defendant's defense under section 547(c)(2) and further erred in granting summary judgment for the debtor. More interestingly, though, the court of appeals recognized that, for the ordinary course defense in this pre-BAPCPA case, the defendant have to prove three elements. However, the Ninth Circuit continued in a footnote: "We recognize that in 2005 Congress amended S 547(c)(2), making it arguably even easier to prove." Defendants in preference actions post-BAPCPA need to prove only two elements: (1) the transfer was in payment of a debt incurred in the ordinary course of business, and (2) the payments were either
(a) made in the ordinary course of business or (b) made according to ordinary business terms.
* Falcon Creditor Trust v. First Ins. Funding (In re Falcon Prods., Inc.), 381 B.R. 543 (8th Cir. B.A.P. Jan. 2008) (Venters, J.)
Do not conflate a preference analysis with a preference defense analysis, said the court. The secured creditor's status should be assessed as of the date of the petition. On the same facts as presented in In re Rocor International, Inc., infra, the Bankruptcy Appellate Panel for the Eight Circuit came down on the other side of the coin, concluding that the defendant's secured status must be assessed as of the date of the petition, not the date of the transfer. While the Tenth Circuit B.A.P.'s logic in Rocor International was sound, said the panel in this case, it was, nevertheless, misplaced. The analysis adopted by the Rocor court conflated the "contemporaneous exchange for new value" defense with an essential element of the plaintiff's prima facie case. Citing, inter alia, the Supreme Court's holding in Palmer Clay Products Co.
v. Brown, 297 U.S. 227, 229, 56 S.Ct. 450, 80 L.Ed. 655 (1936), the panel concluded that the status of the defendant for the purposes of section 547(b)(5) must be assess as of the date of the petition. The contemporaneous exchange analysis can wait until the defendant asserts it as an affirmative defense and must be analyzed separately from the elements of the plaintiff's prima facie case.
