Significant Victory in Fred’s Bankruptcy Case

This significant victory ruling determined that the use of the standard deviation method without expert analysis was inadequate by itself to prove preference-period transfers were made in the ordinary course of business.

ASK secured a significant victory in the District of Delaware in the Fred’s bankruptcy case. In a rare reversal of the Bankruptcy Court’s decision, the District Court ruled that the use of the standard deviation statistical method alone was insufficient to establish that preference-period transfers were made in the ordinary course of business between the parties. The District Court further held that determining the appropriateness of the standard deviation approach required expert testimony, rather than relying on attorney calculations. This decision underscores that establishing the ordinary course of business in preference cases is not merely a statistical analysis, but requires a comprehensive examination of all relevant data and the full context of the debtor-creditor relationship.