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transport goods under a single bill of lading, with one carrier collecting payment for the entire shipment and paying the carriers as appropriate from those proceeds. Debtor had received payments that were owed to Norfolk for prepetition shipments. Norfolk argued that the debtor was holding the funds in trust for Norfolk under the interline trust doctrine, that the funds were not part of the estate and that the funds should be paid to Norfolk immediately. The Court found that the Code does not adopt the interline trust doctrine and no special federal interest justifies the creation of federal common law on the subject. In the absence of applicable state law, interline funds are not subject to a trust.)
In re Bracewell, 454 F.3d 1234 (11th Cir. June 30, 2006) (Post-petition crop disaster payment to Chapter 7 debtor is not property of the estate. The legislation authorizing the payment was enacted after the case was converted from Chapter
12. Although the payment was made on account of pre-petition crop losses, the debtor's property interest in the payment did not come in existence or accrue until the legislation became law. The payment was not property of the estate because the debtor's estate under § 541(a)(1) cannot be greater than the property rights the debtor had at the commencement of the case. Additionally, the payment was not proceeds of property of the estate under § 541(a)(6) because the debtor had no legal entitlement to a future payment at the time the case was converted.)
In re Builders Transport, Inc., 471 F.3d 1178 (11th Cir. Dec. 5, 2006) (Holding: The proceeds of a letter of credit created to secure the debtor's pre-petition lease obligations were property of the debtor's bankruptcy estate pursuant to § 542. The letter of credit doctrine of independence protected the distribution of proceeds to the beneficiary, but the right to retain such proceeds was property of the debtor's estate pursuant to the terms of the lease and South Carolina state law.)
544(a) Avoidance -- Hypothetical Lien Rights
In re Millivision, Inc., 474 F.3d 4 (1st Cir. Jan. 16, 2007) (Exceptions in § 547(c) and (e) do not limit trustee's power under § 544(a) to avoid post-petition lien securing pre-petition loan. Avoidance limitations contained in "generally applicable law," incorporated through § 546(b), refer to generally applicable nonbankruptcy law, thus excluding § 547(c) and (e) exceptions. Additionally, for purposes of § 544(a), involuntary case commenced on date of petition, not the date an order for relief was entered, thus lien was deemed post-petition.)
In re Globe Building Materials, Inc., 463 F.3d 631 (7th Cir. Sept. 8, 2006) (Trustee could avoid State of Wisconsin's employee wages lien, because applicable Wisconsin lien statute did not specifically give the lien priority status over a bona fide purchaser. The Trustee could thus avoid the lien pursuant to § 545.)
