In the case of Union Bank v. Herbert Wolas, Chapter 7 Trustee for the Estate of ZZZZ Best Co., Inc., (1991), the Supreme Court addressed whether a debtor's payments to creditors within 90 days before filing for bankruptcy could be avoided by a trustee under Section 547(b) of the Bankruptcy Code if they were made in accordance with an ordinary business terms defense. The court ruled that such payments can indeed be avoided, rejecting arguments from Union Bank that this provision only applied to transactions outside normal business practices. This decision clarified how "preferential transfers" are defined under U.S law and confirmed that even routine transactions can fall into this category if they occur shortly before bankruptcy is declared.

The dissenting opinion in the case of Union Bank v. Herbert Wolas, Chapter 7 Trustee for the Estate of ZZZZ Best Co., Inc., argued that the majority's interpretation of Section 547(c)(2) was too broad and inconsistent with Congress' intent when it enacted this provision as part of the Bankruptcy Code. The dissenters believed that a "preferential transfer" should only be exempt from avoidance if it is made in payment for new value received by the debtor while he was insolvent, not merely because it falls within an established trade credit relationship between parties. They contended that such an expansive reading would allow creditors to receive preferential treatment simply based on their past dealings with a bankrupt entity rather than any new value they provided during its insolvency period. This could potentially undermine one key purpose behind bankruptcy law: ensuring equitable distribution among all unsecured creditors.