Question
On November 5, Hawes, Inc., a small subcontractor opened an account with Basic Corp., a supplier of construction materials. Hawes promised to pay its bills
On November 5, Hawes, Inc., a small subcontractor opened an account with Basic Corp., a supplier of construction materials. Hawes promised to pay its bills within 30 days of purchase. Although Hawes purchased a substantial quantity of goods on credit from Basic, it made few payments on the accounts until the following March, when it paid Basic over $21,000. On may 14, Hawes filed a voluntary petition under Chapter 7. Why did Hawes pay Basic in March? Does the bankruptcy trustee have a right to recover this payment? Is it fair to Hawes's other creditors if "Basic is allowed to keep the $21,000 payment?
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