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Opinion 255

Case Name: 

Megabar Corp. v. First Sec. Bank of Utah (In re Megabar Corp.)

Judge: 
Judge Clark
Date: 
Jul-21-1988
Case Number(s): 
87PB-0772
Status: 

UNPUBLISHED

Body: 

Debtor-in-possession filed an adversary complaint against defendant bank, alleging that payment on a loan from bank to debtor that was made by debtor's licensee constituted a preference under 11 U.S.C. § 547. Debtor argued that the payment was an indirect transfer of its property to bank, as licensee simply paid to bank what licensee owed to debtor. Bank argued that the payment was made pursuant to licensee's independent obligation as guarantor of debtor's loan. The court defined the issue as whether the payment depleted estate assets in favor of one creditor over others. The court determined that licensee had made the payment to bank in order to protect its own interests as a guarantor on the loan, and that the result did not diminish debtor's estate because bank essentially gave its claim for the payment amount to licensee. Therefore, the payment was not a preference subject to § 547.

Internal Ref: 
Opinion 255
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