Farrar

MEMORANDUM *

This appeal grows out of an adversary proceeding in the Chapter 7 bankruptcy of Bella Vista by Paramont, LLC (“Bella Vista”). Gary Farrar (“Farrar”), the trustee for Bella Vista, sued Warda & Yonano (“W & Y”), Bella Vista’s counsel, to avoid and recover payments made by Bella Vista to W & Y for legal services rendered to Bella Vista and entities related to Bella Vista. Farrar sought to set aside the payments as preferential transfers under 11 U.S.C. § 547 and fraudulent conveyances under 11 U.S.C. § 548 . Judge Ronald H. Sargis of the U.S. Bankruptcy Court for the Eastern District of California (the “bankruptcy court”) entered judgment for Farrar. The Bankruptcy Appellate Panel (“BAP”) reversed.

Preferential Transfer. The Bankruptcy Code permits trustees to recover “preferential transfers,” or “preferences,” made between the debtor and its creditors before the debtor filed a bankruptcy petition. In re Schuman, 81 B.R. 583, 585 (9th Cir. BAP 1987); 11 U.S.C. § 547 . To be avoidable, a preference must, among other things, be made within a specified period — often termed the “reach-back period” — before the bankruptcy filing. In most cases, the reach-back period is 90…