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Abstract

This article will look at some of the principles set forth by case law and provide a more structured method of analyzing cases under section 547(c) (2). In addition, it will examine a few problem areas that are certain to arise in section 547(c) (2) litigation in the near future: (1) Does section 547(c) (2) now protect principal payments on long term debt?; and, (2) will section 547(c) (2) protect a payment to one creditor when all or nearly all other creditors were not paid during the preference period? But before doing so, a short explanation of the Code's definition of preference and a look at the policy and history behind both preference law and the ordinary course exception is in order.

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