Rushton v. Adams (In re Payless Bldg. & Remodeling, Inc.)
UNPUBLISHED
Trustee sought to avoid two payments debtor had made to defendant, within four months of bankruptcy, as preferential under 11 U.S.C. § 96. The payments were to repay a loan defendant made to debtor that was not secured. The court found, based on the parties' stipulated facts, that both payments satisfied all of the elements of a preference under the statute. The court focused on whether the payments had depleted the estate, which would not be the case if the loan had been secured. Since the loan was not secured, the payments were not made in exchange for release of a secured interest, which would prevent depletion of the estate. In addition, the court noted that the facts before it would not support an equitable lien, whether or not such liens remained valid to defeat § 96.