In Re Smith's Home Furnishings, Inc., Debtor. Michael B. Batlan, Trustee v. Transamerica Commercial Finance Corporation

Plaintiff-appellant Michael Batían (“trustee”) appeals the district court’s judgment affirming the decision of the bankruptcy court. Batían filed an action to recover payments made by a chapter 11 debtor to defendant-appellee Transamerica Commercial Finance Corporation (“TCFC”). The bankruptcy court found that the payments were not avoidable transfers under 11 U.S.C. § 547 (b). We agree with the bankruptcy court and the district court that the trustee did not satisfy his burden of showing that TCFC received a greater amount by virtue of the payments than it would have received in a hypothetical chapter 7 liquidation.

FACTUAL AND PROCEDURAL BACKGROUND

Smith’s Home Furnishings, Inc. (“Smith’s”), sold furniture, electronic goods, and appliances at 19 stores in Oregon, Washington, and Idaho. TCFC was one of Smith’s primary lenders for almost a decade. TCFC financed Smith’s purchase of some merchandise (the “prime inventory”), consisting mainly of electronic goods and appliances. TCFC’s loans were secured by a first-priority floating lien on the prime inventory and the proceeds from it. 1 Thus, the prime inventory served as collateral for TCFC’s loans to Smith’s.

Under the loan…

concurring in part and dissenting in part:

I concur in Part II of the majority’s opinion but respectfully dissent from Part I. In my view, under 11 U.S.C. § 547 (b)(5) and (g) a bankruptcy trustee need not prove, as part of the prima facie case establishing an avoidable preference, that a creditor was not fully secured at the time *969 of the allegedly preferential payment, when the value of the collateral on the petition date exceeds the creditor’s claim on the petition date.

To establish a prima facie case that a payment to a creditor was preferential, the trustee must show that the payment enabled the creditor to receive more than it would have in a chapter 7 proceeding had the payment not been made. 11 U.S.C. § 547 (b)(5) & (g); see also 3 Norton Bankr.L. & Prac.2d § 57:9, at 57-39 (West 1997) (“[A] two-part analysis is required. First, one must determine what the creditor receives if the transfer remains valid. Second, one must determine what the creditor would have received in a liquidation case if the transfer had not been made. The appropriate date for this analysis is the date of the petition filing.” (emphasis added; footnote omitted)). “Whether a creditor has received…

265 F.3d 959 (9th Cir. 2001) IN RE SMITH'S HOME FURNISHINGS, INC., DEBTOR. MICHAEL B. BATLAN, TRUSTEE, PLAINTIFF-APPELLANT, v. TRANSAMERICA COMMERCIAL FINANCE CORPORATION, DEFENDANT-APPELLEE. No. 99-35946 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Argued and Submitted November 15, 2000 September 13, 2001 [Copyrighted Material Omitted] K. John Shaffer, Stutman, Treister & Glatt, P.C., Los Angeles, California, for the plaintiff-appellant. Jennifer L. Palmquist and Lauren E. Winters, Garvey, Schubert & Barer, Portland, Oregon, for the defendant-appellee. Appeal from the United States District Court for the District of Oregon Robert E. Jones, District Judge, Presiding D.C. No. CV-99-400-JO Before: Cynthia Holcomb Hall, Pamela Ann Rymer, and Susan P. Graber, Circuit Judges. Hall, Circuit Judge 1 Opinion by Judge Hall; Partial Concurrence and Partial Dissent by Judge Graber 2 Plaintiff-appellant Michael Batlan ("trustee") appeals the district court's judgment affirming the decision of the bankruptcy court. Batlan filed an action to recover payments made by a chapter 11 debtor to defendant-appellee Transamerica Commercial Finance Corporation ("TCFC"). The bankruptcy…