Official Unsecured Creditors Committee of Sufolla, Inc. ex rel. Estate of Sufolla, Inc. v. U.S. National Bank

U.S. National Bank of Oregon appeals the district court’s judgment in favor of the Official Unsecured Creditors Committee of Su-folla, Inc., in the Committee’s action to recover a transfer made by the Chapter 11 debtor to the Bank. The district court found the transfer to be preferential and allowed the Creditors Committee to recover against the Bank pursuant to 11 U.S.C. § 550 (a)(1). After examining for the first time the problem of the “trilateral preference,” we affirm.

I.

On December 11,1985, Sufolla entered into a loan and security agreement with the Bank whereby the Bank agreed to supply Sufolla with a line of credit and Sufolla granted the Bank a security interest in certain collateral to secure any resulting indebtedness. The Bank subsequently perfected its interest. Sufolla’s obligation was guaranteed by certain of its shareholders.

Sufolla filed a voluntary petition for reorganization on June 9, 1988. Prior to March 9, 1988, but subsequent to June 9, 1987, Sufolla paid the Bank $4,322.05 from the sale of equipment, a source other than collateral.

The Official Unsecured Creditors Committee initiated an adversary proceeding against the Bank in the United States…