Case Summary:
The chapter 7 trustee sought to recover an alleged preference. The defendant had received the proceeds of the sale of various assets, including several patents. The defendant subsequently obtained the patents and offered to return them to the estate in satisfaction of the preference claims. The trustee refused the offer and the defendant moved for summary judgment, arguing that under § 550(a) the trustee was only entitled to “the property transferred” if that property was actually available. The court ruled that the purpose of the statute is to restore the bankruptcy estate to the financial condition it would have enjoyed if the transfer had not occurred. As such, the statute permits bankruptcy courts the flexibility to award either the return of the property or a money judgment for its value, depending upon what would best return the estate to its pre-transfer position. The motion for summary judgment was denied.
Statute/Rule References:
11 U.S.C. § 547-- Preference
11 U.S.C. § 550 -- Recovery of Preferences
Key Terms:
Preferences