ADVANCED ISSUES IN AVOIDANCE

 

MacDonald Meat Co. (In re Kemp Pac. Fisheries, Inc.), 16 F.3d 313 (9th Cir. 1994). The underlying purpose of preference law is "to insure an equal distribution of available assets to all creditors." Anderson-Smith, 188 B.R. at 684 (citing Alfa Mut. Fire Ins. Co. v. Memorial (In re Martin), 184 B.R. 985, 990 (M.D. Ala. 1995), aff'd, 101 F.3d 708 (11th Cir. 1996)). Each of the conditions for plaintiffs' avoidance of the transfers to the Defendant pursuant to section 547(b) must be satisfied to state a claim for a preference.

1. Transfer of Debtor's Property. A transfer is defined in the Bankruptcy Code to include "each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with - (i) property; or (ii) an interest in property." 11 U.S.C. § 101(54). A transfer by check has repeatedly been held to be a transfer under section 547 of the Bankruptcy Code. See, e.g., Barnhill v. Johnson, 503

U.S. 393, 112 S. Ct. 1386, 118 L. Gd. 2d 39 (1992).

1. The Transfers Were to a Creditor of the Debtor. The Bankruptcy Code defines a creditor to include any "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." 11 U.S.C. § 101(10). A claim is broadly defined to include any "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C. § 101(5)(A). Typically, the defendant is a creditor under the Bankruptcy Code. If the defendant provides services to the Debtor for payment on credit, the defendant becomes a creditor because of the services rendered.
2. The Transfer Was on Account of an Antecedent Debt. The Transfers to the defendant must be on account of antecedent debt, which is typically proven through evidence that transfers at issue were in payment for services provided earlier on credit. See generally 5 Alan N. Resnick & Henry J. Sommer, Collier on Bankruptcy P 547.05 (15th ed. rev. 2006); Anderson-Smith, 188 B.R. at 684.