We use cookies on this site to enable your digital experience. By continuing to use this site, you are agreeing to our cookie policy. close

Deposit Accounts And Preferences: The Eighth Circuit Weighs In

LexisNexis (December 20, 2017, 10:51 AM EST) -- In a notable piece of bankruptcy litigation, the Eighth Circuit has wrestled with the issue of whether a debtor's drawee bank, in allowing provisional settlement of checks presented through the clearinghouse, was making short-term "loans" to the drawer when the settlement created a negative collected balance on the day of presentment (Day-1).  The debtor's bankruptcy trustee contended that the provisional settlements created a series of unsecured short-term loans that were repaid on Day-2 by incoming wire deposits.  The trustee argued that the covering wires were "transfers...
To view the full article, register now.