Ehrenberg

MEMORANDUM *

Howard Ehrenberg, Chapter 7 trustee of the bankrupt Heartbeat of the City, N.W., Inc. (“HBOC-NW”), appeals the Bankruptcy Appellate Panel (“BAP”) judgment affirming the denial of all relief in his claims against Bert Tenzer, a creditor of the bankrupt, and against Heartbeat of the Nation (“HBN”), a corporation originally formed by Tenzer for payroll purposes. We affirm.

During the approximately five years of adversarial proceedings in the bankruptcy court, the trustee pursued a number of claims, only two of which remain at issue in this appeal. Both claims seek to recover transfers allegedly made by HBOC-NW to Tenzer or HBN after HBOC-NW had become insolvent in 1999.

The Bankruptcy Judge found after trial on the merits that Ehrenberg failed to prove that HBOC-NW had made preferential transfers because he could not prove that money owed and paid to Tenzer came from HBOC-NW’s funds. There was controversy over the source of the money because a major shareholder, now deceased, was, or may have been, personally liable for certain obligations of the bankrupt corporation, and there was simply a failure of proof as to the source of the funds now claimed to have been…