NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

                 Syllabus

UNION BANK v. WOLAS, CHAPTER 7 TRUSTEE FOR
THE ESTATE OF ZZZZ BEST CO., INC.
certiorari to the united states court of appeals for
the ninth circuit
No. 90-1491. Argued November 5, 1991-Decided December 11, 1991

During the 90-day period preceding its filing of a petition under
 Chapter 7 of the Bankruptcy Code, ZZZZ Best Co., Inc. (Debtor) made
 two interest payments and paid a loan commitment fee on its long-
 term debt to petitioner, Union Bank (Bank).  After he was appointed
 trustee of the Debtor's estate, respondent Wolas filed a complaint
 against the Bank to recover those payments as voidable preferences
 under 11 U.S.C. 547(b).  The Bankruptcy Court held that the
 payments were transfers made in the ordinary course of business
 pursuant to 547(c)(2) and thus were excepted from 547(b).  The
 District Court affirmed, but the Court of Appeals reversed, holding
 that the ordinary course of business exception was not available to
 long-term creditors.
Held:
   1.Payments on long-term debt, as well as those on short-term
 debt, may qualify for the ordinary course of business exception to the
 trustee's power to avoid preferential transfers.  Section 547(c)(2)
 contains no language distinguishing between long- and short-term
 debt and, therefore, provides no support for Wolas' contention that its
 coverage extends only to short-term debt.  Moreover, 547's relevant
 history in part supports, and is not otherwise inconsistent with, a
 literal reading of the statute.  While 547(c)(2), as originally enacted,
 was limited to payments made within 45 days of the date a debt was
 incurred, Congress amended the provision in 1984 by deleting the
 time limitation entirely.  That Congress may have intended only to
 address particular concerns of specific short-term creditors in the
 amendment or may not have foreseen all of the consequences of its
 statutory enactment is insufficient reason for refusing to give effect
 to 547(c)(2)'s plain meaning.  Also unpersuasive is Wolas' argument
 that Congress originally enacted 547(c)(2) to codify a judicially
 crafted ``current expense'' rule covering contemporaneous exchanges
 for new value, since other 547(c) exceptions occupy some (if not all)
 of the territory previously covered by that rule, and since there is no
 extrinsic evidence that Congress intended to codify the rule in
 547(c)(2).  Nor does the fact that the exception's availability to long-
 term creditors may not directly further 547's underlying policy of
 equality of distribution among all creditors support limiting 547(c)(2)
 to short-term debt, for it does further the provision's other policy of
 deterring creditors from racing to the courthouse to dismember a
 debtor and may indirectly further the equal distribution goal as well.
 Pp.3-11.
   (2)The question whether the Bankruptcy Court correctly concluded
 that the Debtor's payments qualify for the ordinary course of busi-
 ness exception remains open for the Court of Appeals on remand.
 Pp.11-12.
921 F.2d 968, reversed and remanded.

 Stevens, J., delivered the opinion for a unanimous Court.  Scalia,
J., filed a concurring opinion.
-------------------------------


    NOTICE: This opinion is subject to formal revision before publication in the
    preliminary print of the United States Reports.  Readers are requested to
    notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D.C. 20543, of any typographical or other formal errors, in order
that
    corrections may be made before the preliminary print goes to press.


SUPREME COURT OF THE UNITED STATES
--------
No. 90-1491
--------
UNION BANK, PETI v. HERBERT WOLAS,
chapter 7 trustee for the estate of
 ZZZZ BEST CO., INC.
on writ of certiorari to the united states court of
appeals for the ninth circuit
[December 11, 1991]

  Justice Stevens delivered the opinion of the Court.
  Section 547(b) of the Bankruptcy Code, 11 U. S. C.
547(b), authorizes a trustee to avoid certain property
transfers made by a debtor within 90 days before bank-
ruptcy.  The Code makes an exception, however, for
transfers made in the ordinary course of business, 11
U. S. C. 547(c)(2).  The question presented is whether
payments on long-term debt may qualify for that exception.
  On December 17, 1986, ZZZZ Best Co., Inc. (Debtor)
borrowed seven million dollars from petitioner, Union Bank
(Bank).  On July 8, 1987, the Debtor filed a voluntary
petition under Chapter 7 of the Bankruptcy Code.  During
the preceding 90-day period, the Debtor had made two
interest payments totalling approximately $100,000 and
had paid a loan commitment fee of about $2,500 to the
Bank.  After his appointment as trustee of the Debtor's
estate, respondent filed a complaint against the Bank to
recover those payments pursuant to 547(b).
  The Bankruptcy Court found that the loans had been
made ``in the ordinary course of business or financial
affairs'' of both the Debtor and the Bank, and that both
interest payments as well as the payment of the loan
commitment fee had been made according to ordinary
business terms and in the ordinary course of business.  As
a matter of law, the Bankruptcy Court concluded that the
payments satisfied the requirements of 547(c)(2) and
therefore were not avoidable by the trustee.  The District
Court affirmed the Bankruptcy Court's summary judgment
in favor of the Bank.
  Shortly thereafter, in another case, the Court of Appeals
held that the ordinary course of business exception to
avoidance of preferential transfers was not available to
long-term creditors.  In re CHG International, Inc., 897
F. 2d 1479 (CA9 1990).  In reaching that conclusion, the
Court of Appeals relied primarily on the policies underlying
the voidable preference provisions and the state of the law
prior to the enactment of the 1978 Bankruptcy Code and its
amendment in 1984.  Thus, the Ninth Circuit concluded, its
holding in CHG International, Inc. dictated a reversal in
this case.  921 F. 2d 968, 969 (1990).  The importance of
the question of law decided by the Ninth Circuit, coupled
with the fact that the Sixth Circuit had interpreted
547(c)(2) in a contrary manner, In re Finn, 909 F. 2d 903
(1990), persuaded us to grant the Bank's petition for
certiorari.  500 U. S. ___ (1991).
                      I
  We shall discuss the history and policy of 547 after
examining its text.  In subsection (b), Congress broadly
authorized bankruptcy trustees to -avoid any transfer of an
interest of the debtor in property- if five conditions are
satisfied and unless one of seven exceptions defined in
subsection (c) is applicable.  In brief, the five characteris-
tics of a voidable preference are that it (1) benefit a credi-
tor; (2) be on account of antecedent debt; (3) be made while
the debtor was insolvent; (4) be within 90 days before bank-
ruptcy; and (5) enable the creditor to receive a larger share
of the estate than if the transfer had not been made.
Section 547 also provides that the debtor is presumed to
have been insolvent during the 90-day period preceding
bankruptcy.  11 U. S. C. 547(f).  In this case, it is undis-
puted that all five of the foregoing conditions were satisfied
and that the interest and loan commitment fee payments
were voidable preferences unless excepted by subsection
(c)(2).
  The most significant feature of subsection (c)(2) that is
relevant to this case is the absence of any language distin-
guishing between long-term debt and short-term debt.
That subsection provides:
-The trustee may not avoid under this section a
transfer-
.                 .                 .                 .                 .
  ``(2)to the extent that such transfer was-
  ``(A)in payment of a debt incurred by the debtor in
the ordinary course of business or financial affairs of
the debtor and the transferee;
  ``(B)made in the ordinary course of business or finan-
cial affairs of the debtor and the transferee; and
  ``(C)made according to ordinary business terms.-

  Instead of focusing on the term of the debt for which the
transfer was made, subsection (c)(2) focuses on whether the
debt was incurred, and payment made, in the ``ordinary
course of business or financial affairs'' of the debtor and
transferee.  Thus, the text provides no support for respon-
dent's contention that 547(c)(2)'s coverage is limited to
short-term debt, such as commercial paper or trade debt.
Given the clarity of the statutory text, respondent's burden
of persuading us that Congress intended to create or to
preserve a special rule for long-term debt is exceptionally
heavy.  United States v. Ron Pair Enterprises, Inc., 489
U. S. 235, 241-242 (1989).  As did the Ninth Circuit,
respondent relies on the history and the policies underlying
the preference provision.
                     II
  The relevant history of 547 contains two chapters, one
of which clearly supports, and the second of which is not
inconsistent with, the Bank's literal reading of the statute.
Section 547 was enacted in 1978 when Congress overhauled
the Nation's bankruptcy laws.  The section was amended in
1984.  For purposes of the question presented in this case,
the original version of 547 differed in one significant
respect from the current version:  it contained a provision
that the ordinary course of business exception did not apply
unless the payment was made within 45 days of the date
the debt was incurred.  That provision presumably exclud-
ed most payments on long-term debt from the exception.
In 1984 Congress repealed the 45-day limitation but did not
substitute a comparable limitation.  See Bankruptcy
Amendments and Federal Judgeship Act of 1984, Pub. L.
98-353, 462(c), 98 Stat. 333, 378.
  Respondent contends that this amendment was intended
to satisfy complaints by issuers of commercial paper and
by trade creditors that regularly extended credit for
periods of more than 45 days.  Furthermore, respondent
continues, there is no evidence in the legislative history
that Congress intended to make the ordinary course of
business exception available to conventional long-term
lenders.  Therefore, respondent argues, we should follow the
analysis of the Ninth Circuit and read 547(c)(2) as protect-
ing only short-term debt payments.  Cf. In re CHG Interna-
tional,  897 F. 2d, at 1484.
  We need not dispute the accuracy of respondent's descrip-
tion of the legislative history of the 1984 amendment in
order to reject his conclusion.  For even if Congress adopted
the 1984 amendment to redress particular problems of
specific short-term creditors, it remains true that Congress
redressed those problems by entirely deleting the time
limitation in 547(c)(2).  The fact that Congress may not
have foreseen all of the consequences of a statutory enact-
ment is not a sufficient reason for refusing to give effect to
its plain meaning.  Toibb v. Radloff, 501 U. S. ___, ___
(1991).
  Respondent also relies on the history of voidable prefer-
ences prior to the enactment of the 1978 Bankruptcy Code.
The text of the preference provision in the earlier Bank-
ruptcy Act did not specifically include an exception for
payments made in the ordinary course of business.  The
courts had, however, developed what is sometimes described
as the ``current expense'' rule to cover situations in which a
debtor's payments on the eve of bankruptcy did not dimin-
ish the net estate because tangible assets were obtained in
exchange for the payment.  See Marshall v. Florida
National Bank of Jacksonville, 112 F. 2d 380, 382 (CA5
1940); 3 Collier On Bankruptcy  60.23, p. 873 (14th ed.
1977).  Without such an exception, trade creditors and other
suppliers of necessary goods and services might have been
reluctant to extend even short-term credit and might have
required advance payment instead, thus making it difficult
for many companies in temporary distress to have remained
in business.  Respondent argues that Congress enacted
547(c)(2) in 1978 to codify that exception, and therefore the
Court should construe 547(c)(2) as limited to the confines
of the current expense rule.
  This argument is not compelling for several reasons.
First, it is by no means clear that 547(c)(2) should be
construed as the statutory analogue of the judicially crafted
current expense rule because there are other exceptions in
547(c) that explicitly cover contemporaneous exchanges for
new value.  Those provisions occupy some (if not all) of
the territory previously covered by the current expense rule.
Nor has respondent directed our attention to any extrinsic
evidence suggesting that Congress intended to codify the
current expense rule in 547(c)(2).
  The current expense rule developed when the statutory
preference provision was significantly narrower than it is
today.  To establish a preference under the Bankruptcy Act,
the trustee had to prove that the challenged payment was
made at a time when the creditor had ``reasonable cause to
believe that the debtor [was] insolvent.''  11 U. S. C. 96(b)
(1976 ed.).  When Congress rewrote the preference provision
in the 1978 Bankruptcy Code, it substantially enlarged the
trustee's power to avoid preferential transfers by eliminat-
ing the reasonable cause to believe requirement for trans-
fers made within 90 days of bankruptcy and creating a
presumption of insolvency during that period.  See 11
U. S. C. 547(b), (c)(2), (f); H. R. Rep. No. 95-595, p. 178
(1977).  At the same time, Congress created a new excep-
tion for transfers made in the ordinary course of business,
11 U. S. C. 547(c)(2).  This exception was intended to
``leave undisturbed normal financial relations, because it
does not detract from the general policy of the preference
section to discourage unusual action by either the debtor or
his creditors during the debtor's slide into bankruptcy.''
H. R. Rep. No. 95-595, at 373.
  In light of these substantial changes in the preference
provision, there is no reason to assume that the justification
for narrowly confining the ``current expense'' exception to
trade creditors before 1978 should apply to the ordinary
course of business exception under the 1978 Code.  Instead,
the fact that Congress carefully reexamined and entirely
rewrote the preference provision in 1978 supports the
conclusion that the text of 547(c)(2) as enacted reflects the
deliberate choice of Congress.
                     III
   The Bank and the trustee agree that 547 is intended to
serve two basic policies that are fairly described in the
House Committee Report.  The Committee explained:
-A preference is a transfer that enables a creditor to
receive payment of a greater percentage of his claim
against the debtor than he would have received if the
transfer had not been made and he had participated in
the distribution of the assets of the bankrupt estate.
The purpose of the preference section is two-fold.  First,
by permitting the trustee to avoid prebankruptcy
transfers that occur within a short period before
bankruptcy, creditors are discouraged from racing to
the courthouse to dismember the debtor during his
slide into bankruptcy.  The protection thus afforded the
debtor often enables him to work his way out of a
difficult financial situation through cooperation with all
of his creditors.  Second, and more important, the
preference provisions facilitate the prime bankruptcy
policy of equality of distribution among creditors of the
debtor.  Any creditor that received a greater payment
than others of his class is required to disgorge so that
all may share equally.  The operation of the preference
section to deter `the race of diligence' of creditors to
dismember the debtor before bankruptcy furthers the
second goal of the preference section-that of equality
of distribution.-  Id., at 177-178.
As this comment demonstrates, the two policies are not
entirely independent.  On the one hand, any exception for
a payment on account of an antecedent debt tends to favor
the payee over other creditors and therefore may conflict
with the policy of equal treatment.  On the other hand, the
ordinary course of business exception may benefit all
creditors by deterring the ``race to the courthouse'' and
enabling the struggling debtor to continue operating its
business.
  Respondent places primary emphasis, as did the Court of
Appeals, on the interest in equal distribution.   See In re
CHG International, 897 F. 2d, at 1483-1485.  When a
debtor is insolvent, a transfer to one creditor necessarily
impairs the claims of the debtor's other unsecured and
undersecured creditors.  By authorizing the avoidance of
such preferential transfers, 547(b) empowers the trustee to
restore equal status to all creditors.  Respondent thus
contends that the ordinary course of business exception
should be limited to short-term debt so the trustee may
order that preferential long-term debt payments be re-
turned to the estate to be distributed among all of the
creditors.
  But the statutory text-which makes no distinction
between short-term debt and long-term debt-precludes an
analysis that divorces the policy of favoring equal distribu-
tion from the policy of discouraging creditors from racing to
the courthouse to dismember the debtor.  Long-term
creditors, as well as trade creditors, may seek a head start
in that race.  Thus, even if we accept the Court of Appeals'
conclusion that the availability of the ordinary business
exception to long-term creditors does not directly further
the policy of equal treatment, we must recognize that it
does further the policy of deterring the race to the court-
house and, as the House Report recognized, may indirectly
further the goal of equal distribution as well.  Whether
Congress has wisely balanced the sometimes conflicting
policies underlying 547 is not a question that we authorized to decide.
                     IV
   In sum, we hold that payments on long-term debt, as
well as payments on short-term debt, may qualify for the
ordinary course of business exception to the trustee's power
to avoid preferential transfers.  We express no opinion,
however, on the question whether the Bankruptcy Court
correctly concluded that the Debtor's payments of interest
and the loan commitment fee qualify for the ordinary course
of business exception, 547(c)(2).  In particular, we do not
decide whether the loan involved in this case was incurred
in the ordinary course of the Debtor's business and of the
Bank's business, whether the payments were made in the
ordinary course of business, or whether the payments were
made according to ordinary business terms.  These ques-
tions remain open for the Court of Appeals on remand.
  The judgment of the Court of Appeals is reversed and the
case is remanded for further proceedings consistent with
this opinion.
                            It is so ordered.
-------------------------------

SUPREME COURT OF THE UNITED STATES
--------
No. 90-1491
--------
UNION BANK, PETITIONER v. HERBERT WOLAS,
chapter 7 trustee for the estate of
ZZZZ BEST CO., INC.
on writ of certiorari to the united states court of
appeals for the ninth circuit
[December 11, 1991]

  Justice Scalia, concurring.
  I join the opinion of the Court, including Parts II and III,
which respond persuasively to legislative-history and policy
arguments made by respondent.  It is regrettable that we
have a legal culture in which such arguments have to be
addressed (and are indeed credited by a Court of Appeals),
with respect to a statute utterly devoid of language that
could remotely be thought to distinguish between long-term
and short-term debt.  Since there was here no contention of
a ``scrivener's error'' producing an absurd result, the plain
text of the statute should have made this litigation unneces-
sary and unmaintainable.
-------------------------------
