Relying on 11 U.S.C. §547(b) and 550(a), chapter 11 trustee sought to avoid and recover loan payments made by debtor during the one-year period preceding the filing of its petition. The bankruptcy court ruled that, as the transfers did not satisfy the criteria of § 547(b)(5), they were not preferential, and trustee appealed. The parties stipulated that the debt on which the payments were made was over-secured during the preference period and, therefore, the lien-holder had not received more from the payments than it would have received from liquidation of the collateral, as is required for avoidance under § 547(b)(5). However, the district court relied on a case law exception to the over-secured rule, which is that payments on an over-secured property may still be preferential if the payments are not accompanied by the release of an equivalent value to the estate. The district court then found that the loan payments had not been accompanied by release of an equivalent value, since the loan had been made to a joint venture, of which debtor was only a 50% owner. Therefore, the benefit to debtor was only 50% of the amount of the payments made. The district court rejected lender's argument that it could impose a junior lien on the property for the 50% of the payments that debtor had made on behalf of the other joint-venturer, concluding that such a lien was potentially valueless. Accordingly, the payments were held to have been preferential, and the bankruptcy court's order denying trustee's avoidance claim was reversed.