In the case of Thompson, Trustee v. Magnolia Petroleum Co. et al., 1939, the U.S Supreme Court was tasked with deciding whether a bankruptcy trustee could recover payments made by an insolvent debtor during a period of insolvency as preferential transfers under Section 60(b) and (c) of the Bankruptcy Act. The debtor in question had purchased gas from Magnolia on credit while insolvent and later paid for it within four months before filing for bankruptcy. The court ruled that these payments were not preferential transfers because they were made in the ordinary course of business and did not result in any depletion of assets available to other creditors at the time when payment was made since new value was given by Magnolia after each payment which replenished or increased estate's assets.

In the dissenting opinion for Thompson, Trustee v. Magnolia Petroleum Co., Justice Black disagreed with the majority's decision that a bankruptcy trustee could not recover payments made by an insolvent debtor to its creditors within four months of filing for bankruptcy if those payments were considered preferential transfers under state law. The dissent argued that this interpretation was inconsistent with the purpose and language of federal bankruptcy laws, which aimed to ensure equal distribution among all creditors rather than allowing certain preferred creditors to receive more than their fair share at the expense of others. Furthermore, it contended that such a ruling would undermine confidence in commercial transactions because it allowed debtors on the brink of insolvency to favor some creditors over others without any legal repercussions.