In re Johnston Industries, Inc. (03-40293, Adv. No. 04-04089)
In a preference action, a transfer made by the debtor extinguished two obligations. The first was a compensation obligation to an employee that arose at the same the transfer was made. The second was a guarantee obligation to the bank that arose prior to the time of the transfer. The Court found the purpose of the transfer was to satisfy the compensation obligation and, thus, was made "on account of" a contemporaneous debt.
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Date:
Tuesday, November 21, 2006