Although the Bankruptcy Code does not directly address the subject, it is well settled that in an action to set aside a preference the trustee is entitled, under the bankruptcy court's equitable powers, to prejudgment interest from the date of demand for its return, or in the absence of a prior demand, from the date of the filing of the complaint. Matter of Foreman Industries, Inc., 59 B.R. 145, 155 (Bankr.S.D.Ohio 1986); In re Demetralis, 57 B.R. 278, 284 (Bankr.N.D.Ill. 1986); In re Fulghum Construction Corp., 45 B.R. 112 (Bankr.M.D.Tenn. 1984); In re Independent Clearing House Co., 41 B.R. 985, 1015 (Bankr.D.Utah 1984).
Other courts have relied on this holding to conclude that the date of invoice is not the date a debt is incurred, but rather the debt arises when the physical product actually transfers. See In re Demetralis, 57 B.R. 278, 284 (Bankr.N.D.Ill. 1986). ECI appears to equate the date of the book transfer with the date of invoice in a physical product transfer.
This presumption of insolvency is not conclusive and may be rebutted by evidence presented by the transferee. Matter of Taxman Clothing Co., Inc., 905 F.2d 166, 168 (7th Cir. 1990); Lifchitz, 131 B.R. at 834 ( citing In re Demetralis, 57 B.R. 278, 281 (Bankr.N.D.Ill. 1986)). CCC has failed to present any evidence to overcome the statutory presumption of insolvency.
This presumption of insolvency is not conclusive and may be rebutted by evidence presented by the transferee. In re Demetralis, 57 B.R. 278, 281 (Bankr.N.D.Ill. 1986). However, Bender has failed to present any evidence which either overcomes the statutory presumption of insolvency or disputes the facts contained in the Affidavits.
(Emphasis added.)In re Demetralis, 57 B.R. 278, 283 (Bankr.N.D.Ill. 1986). A number of prominent bankruptcy cases have held similarly, see In re Amarex, Inc., 74 B.R. 378, 383 (Bankr.W.D.Okla.
In light of this provision, "a bare allegation of the debtor's solvency" is insufficient to rebut the presumption. In re Demetralis, 57 B.R. 278, 281 (Bankr.N.D.Ill. 1986). The purpose of this presumption is said to be "to simplify a trustee's burden of proving insolvency by dispensing with the necessity of reconstructing debtor's financial condition."
The debtor is presumed to have been insolvent during the 90 days immediately preceding the filing of the bankruptcy petition, but that is not a conclusive finding, and may be rebutted by evidence presented by the transferee. Lifchitz , 131 B.R. at 834 ; In re Demetralis , 57 B.R. 278, 281 (Bankr. N.D. Ill. 1986). The bulk of testimony and cross-examination at trial dealt with this issue under Section 547. Blakely, the principal of Plaintiff, was called to testify as to insolvency of the business at the time transfers were made. She discussed at length the nature of the equipment, office supplies, and retail inventory of the business when the transfers occurred. She also discussed the amount of money the business brought in, as well as its debts to Defendant and other creditors.
See, e.g., In re Lessig Constr., Inc., 67 B.R. 436, 437 (Bankr.E.D.Pa. 1986); In re Demetralis, 57 B.R. 278, 284 (Bankr.N.D.Ill. 1986). I acknowledge the weakness of Sabrina's ordinary course defense in this case.
A debtor or its trustee is "ordinarily entitled to recover interest on a preference judgment against a transferee." In re Husher, 131 B.R. 550, 554 (E.D.N.Y. 1991); In re Demetralis, 57 B.R. 278, 284 (Bankr.N.D.Ill. 1986) (Ginsberg, J.) (citations omitted).
See, e.g., In re Demetralis, 57 B.R. 278, 284 (Bankr.N.D.Ill. 1986). In Caceres Johnson, the court noted that the trustee did not contend that the debtor became obligated to pay at any point prior to acceptance.