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§ 549(a)

In re Kmart Corp.

Apr
11
2006
Ruling
Court ruled that debtor payments made to critical vendors pursuant to court order, which was later reversed, were not exempted from payment recovery action.
Procedural posture

The court had previously approved plaintiff debtors'motion under 11 U.S.C. § 105(a) for authorization to pay prepetition claims of critical trade vendors (critical vendor order). The Court of Appeals for the Seventh Circuit reversed the critical vendor order. The debtors then filed adversary proceedings against defendants, critical vendors, to recover payments made pursuant to the order. The critical vendors moved to dismiss.

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opinion summary, case decided on April 11, 2006 , LexisNexis #0506-026
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Wells v. TCF Natl Bank (In re Hi Tech Fleet Serv.)

Mar
09
2006
Ruling
Court dismissed the trustee's complaint alleging avoidable transfers and demanding turnover since no provision in either the Code or case law allowed a chapter 7 trustee to bring an action challenging an asset sale consummated pursuant to court order in a chapter 11 proceeding.
Procedural posture

The matter came before the court on plaintiff chapter 7 trustee's motion for summary judgment. The trustee requested summary judgment on a two-count complaint seeking: (1) a determination of the amount, validity, and extent of defendant creditor's claim, and (2) avoidance of an allegedly unauthorized postpetition transfer of funds to the creditor.

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opinion summary, case decided on March 09, 2006 , LexisNexis #0306-134
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Burns v. Shelton (In re Shelton)

Oct
20
2005
Ruling
The earmarking doctrine did not apply to a postpetition mortgage transaction, and the mortgage was invalid since a prior transfer of the underlying property was avoided.
Procedural posture

Plaintiff chapter 7 trustee sought avoidance of the transfer of property between defendants, debtor and his father, pursuant to 11 U.S.C. § 549(a). The court previously determined that the "earmarking doctrine" did not apply to the transfer. The matter was remanded from the U.S. Court of Appeals for the Sixth Circuit.

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opinion summary, case decided on October 20, 2005 , LexisNexis #0106-123
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