Garner v. Knoll, Inc. (In re Tusa-Expo Holdings, Inc.)

Summarized by Craig Geno , Law Offices of Craig M Geno, PLLC
10 years 1 month ago

Citation:

Fifth Circuit;No. 15-10274

Tag(s):

Ruling:

Trustee in preference litigation failed to satisfy the "source" aspect of the El Paso Refining case from the Fifth Circuit and thus did not establish the requirement of Section 547 (b)(5) so that the transfers in question were not preferences since the transfers were from the proceeds of the defendant's own collateral.

Procedural context:

Appeal from the District Court and Bankruptcy court to the Fifth Circuit

Facts:

Trustee sought to avoid transfers as preferences. In a complex fact pattern, the transfers involved were the subject of the collateral of two secured creditors. The debtor's customers made payments on account through a lockbox arrangement and one of the secured creditors would apply the receipts to its line of credit and advance funds under the line of credit to the debtor. The other secured creditor would receive payments on its secured claim from advanced funds or other collections and the Trustee sought to avoid the transfers to that secured creditor as preferential. The creditor/defendant asserted that the funds were proceeds of its collateral and not avoidable.

Judge(s):

Smith, Wiener and Graves

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