POST-PETITION TRANSFEREE
1.
Pertinent provision of 11 U.S.C.
§ 550 states:
(a) Except as otherwise provided in this
section, to the extent that a transfer is
avoided under section 544, 545, 547,
548, 549, 553(b), or 724(a) of this title,
the trustee may recover, for the benefit
of the estate, the property transferred, or,
if the court so orders, the value of such
property, from—
(1) the initial transferee
of such transfer or the
entity for whose benefit
such
transfer
was
made; or
(2) any immediate or
mediate transferee of
such initial transferee.
(Emphasis added)
2.
See 11 U.S.C. § 541 which
essentially is any interest the debtor has,
legal or equitable, in property which is
real, personal, tangible or intangible.
3
If the transfer was not post-petition,
good news: The transferee will not be
subject to attack under 11 U.S.C. § 549
(post-petition transfer). But, be concerned
about 11 U.S.C. § 547 (preference) or 11
U.S.C. § 548 (fraudulent transfer). This
article focuses only on the transfers
which arose after the bankruptcy filing
3.
Pertinent provision of 11 U.S.C.
§ 549 states:
(a) Except as provided in
subsection (b) or (c) of this
section, the trustee may avoid
a transfer of property of the
estate—
(1) that occurs after the
commencement of the case;
and
(2)
(A) that is authorized
only under section
303(f) or 542(c) of this
title; or
(B) that is not authorized
under this title or by the court.
(Emphasis added)
4.
The term ‘knowledge’ is not
defined in the Bankruptcy Code or in its
42
CONSUMER BANKRUPTCY JOURNAL
legislative history. Although decisional
law is relatively sparse, and the Second
Circuit has not spoken on the issue, the
courts have uniformly determined that
constructive knowledge or inquiry notice
precludes invocation of § 549(a)’s good
faith purchaser exception.” McCord v.
Agard (In re Bean), 251 B.R. 196, 202
(E.D.N.Y. 2000)
The Bean court further wrote:
See In re Nordic
Village, 915 F.2d 1049,
1055 (6th Cir. 1990),
overruled on other
grounds, United States
v. Nordic Village, Inc.,
503 U.S. 30, 117 L. Ed.
2d 181, 112 S. Ct. 1011
(1992)
(knowledge
imputed to transferee
when bank check noted
“remitter” and debtor’s
name); In re Wolverton
Assocs., 909 F.2d 1286,
1296 (9th Cir. 1990)
(knowledge
requires
only inquiry notice);
Smith v. Mixon, 788
F.2d 229, 232 n.2 (4th
Cir. 1986) (knowledge
requirement is satisfied
if the transferee “knew
of facts that would lead
a reasonable person
to believe that the
property
transferred
was
recoverable”);
Bonded Fin. Servs.,
Inc. v. European Am.
Bank, 838 F.2d 890,
897-98 (7th Cir. 1988)
(knowledge
is
an
awareness of facts
which a reasonable
transferee should have
known); Brown v. Harris,
96 B.R. 957, 962 (Bankr.
W.D. Mo. 1989) (citing
Evans v. Robbins, 91
B.R. 879, 886 (Bankr.
W.D. Mo. 1988)) (§
549(c) is construed to
include
‘constructive
knowledge,’ which is
‘knowledge of such
Spring 2018
facts or circumstances
that would ordinarily
cause
a
prudent
person exercising the
reasonable
diligence
expected of him to
inquire and learn the
critical facts’).
2000)
251 B.R. 196, 202 (E.D.N.Y.
5.
McCord v. Agard (In re Bean),
252 F.3d 113, 116 (2d Cir. N.Y. 2001)
6
“A good faith purchaser without
knowledge of the commencement of
the case and for less than present fair
equivalent value has a lien on the property
transferred to the extent of any present
value given, unless a copy or notice of
the petition was so filed before such
transfer was so perfected.”
This begs the question: Can one
be a “good faith purchaser” even though
the petition was recorded before the
transfer was perfected?
7.
“Constructive knowledge is
knowledge of such facts or circumstances
that would ordinarily cause a prudent
person exercising the reasonable
diligence expected of him to inquire and
learn the critical facts. In re Robbins, 91
B.R. at 886.” In re Auxano, Inc., 96 B.R.
957, 962 (Bankr. W.D. Mo. 1989)
8.
The Bankruptcy Code defines
most terms in 11 U.S.C. § 101. Good
faith purchaser is not defined in the
Bankruptcy Code. That term, however, is
a term of the Uniform Commercial Code
from which this section arises. In 1-201,
the following definitions are given:
(20) “Good faith,” except as
otherwise provided in Article
5, means honesty in fact and
the observance of reasonable
commercial standards of fair
dealing.
(30) “Purchaser” means
person that takes by purchase.
a
9.
“The term ‘present fair equivalent
value’ has been defined as more exacting
than ‘reasonably equivalent value,’ and
requires that the value given be close
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