dissenting:
The majority concludes that the bankruptcy court’s decision was based on its finding that the ordinary course of business standard would be met if the dealer paid off the lender within 45 days of trade-in or within 20 days of receipt of funds from a third-party purchaser. Because that finding was supported by the evidence, the majority says we cannot disturb it on appeal.
If that were all that the court found, I might agree. But the court did not stop there. It recognized that the focus in this case is the conduct of the lender after the first 45 days from the date of the trade-in. 245 B.R. at 388. The court concluded that, once more than 45 days had passed from trade-in, the ordinary course standard could still be met if the debtor paid the lender within 20 days of receipt of the resale proceeds of the vehicle. Id. at 389. Because debtor had done neither, the court concluded that the payment was not in the ordinary course of business.
There is no evidence to support a finding that the ordinary course of business in the industry is to take reasonable affirmative steps to preserve the lender’s security. The bankruptcy court essentially devised a standard that focused on what practices a reasonable creditor should engage in rather than on the correct standard of “practices common to businesses similarly situated to the debtor and transferee.” Loretto Winery, 107 B.R. at 709. The court affirmatively rejected as ordinary the possible industry practice to “do nothing” once a dealer possessed and was reselling the vehicle. 245 B.R. at 389. That was error. The question is what the normal practices of an industry are, not what the practices reasonably should be.
The court’s erroneous creation of its own “reasonable creditor” standard, based on what it determined a reasonable secured lender would do in circumstances similar to those in this case, infected its findings and conclusions. I would hold that the bankruptcy court erred by injecting a “reasonable creditor” standard into the ordinary course of business defense.
I respectfully dissent.