Aalfs

Appellant Charles D. Aalfs (“Aalfs”) appeals a decision by the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) affirming the bankruptcy court’s judgment under 11 U.S.C. § 549 (a) avoiding the transfer to Aalfs of Straightline Investments, Inc.’s (“Debtor” or “Straightline”) accounts receivable which had a face value of approximately $200,600. In avoiding the transfer, the bankruptcy court ordered Aalfs to pay the Straightline trustee $163,007, the amount collected by Aalfs on the transferred accounts, and to transfer back to the trustee all uncollected accounts receivable still in Aalfs’s possession.

On appeal, Aalfs contends that the transfer of accounts receivable was not an avoidable transfer under 11 U.S.C. § 549 (a) because there was no depletion or diminution of the Debtor’s estate. Aalfs paid Straightline $186,455 for the accounts. Aalfs argues that the transfer was an outright sale of receivables in the ordinary course of business, and the defenses of recoupment and earmarking should apply to bar recovery by the trustee. Aalfs also argues that, even if the transfer was avoidable, the bankruptcy court awarded the wrong measure of recovery to the trustee under 11 U.S.C. §…