Submitted October 7, 2014
Appeal from the United States Bankruptcy. Appellate Panel for the Eighth Circuit.
Before LOKEN, BEAM, and COLLOTON, Circuit Judges.
LOKEN, Circuit Judge.
The bankruptcy trustee for Chapter 7 debtor Genmar Holdings, Inc. commenced this adversary proceeding seeking to avoid as preferential a $65,000 payment made to Michael Callandrillo within ninety days of bankruptcy. See 11 U.S.C. § 547(b). The bankruptcy court granted the trustee summary judgment. The Bankruptcy Appellate Panel (BAP) affirmed. Calandrillo appeals, arguing the payment was a " contemporaneous exchange for new value" that may not be avoided under § 547(c)(1). Reviewing the grant of summary
judgment de novo, we agree with the BAP that Calandrillo failed to prove the parties to the transaction intended a contemporaneous exchange and therefore affirm. See Contemporary Indus. Corp. v. Frost, 564 F.3d 981, 984 (8th Cir. 2009) (standard of review).
The relevant facts are undisputed. In April 2007, Calandrillo purchased a boat manufactured by Hydra-Sports, a subsidiary of Genmar Tennessee, a subsidiary of Genmar Holdings. Calandrillo claimed the boat was defective and commenced an arbitration proceeding. On February 19, 2009, Calandrillo entered into a settlement agreement with " Genmar Tennessee, Inc. . . . together with its . . . parents [and] subsidiaries." Calandrillo agreed to convey title to the boat to Genmar Tennessee, free of liens and encumbrances; Hydra-Sports agreed to pay Calandrillo $205,000 in the following manner:
A. Hydra-Sports shall pay to the Bank (which currently holds a lien on the Boat) such amounts as necessary to obtain a discharge of the Bank's lien on the Boat, and it is an express condition of this agreement that Hydra-Sports is to receive a lien waiver from the Bank immediately upon payment to the Bank . . .
B. The remainder of the Settlement Payment shall be paid to the trust account of [Calandrillo's attorneys], in trust for and on behalf of [Calandrillo], no sooner tha[n] 15 days after Genmar Tennessee receives the lien waiver confirming the Bank's discharge of the lien and all title assignment documents . . . for the Boat.
The next day, the bank received $140,000 from a Genmar entity and issued a lien waiver. On February 25, Calandrillo executed a bill of sale conveying the boat to Genmar Tennessee. On March 4, he sent documents assigning title to Genmar Tennessee. On March 23, Genmar Holdings sent Calandrillo a check for the $65,000 settlement balance. On June 1, 2009, Genmar Holdings and twenty-one subsidiaries, including Genmar Tennessee, filed for bankruptcy. The trustee brought this suit seeking recovery of the $65,000 payment from Calandrillo as a preferential transfer. The $140,000 payment to the bank a month earlier was outside the ninety-day preference period in § 547(b).
The avoidance of preferential transfers under § 547 " is intended to discourage creditors from racing to dismember a debtor sliding into bankruptcy and to promote equality of distribution to creditors in bankruptcy." In re Jones Truck Lines, Inc., 130 F.3d 323, 326 (8th Cir. 1997). Contemporaneous new value exchanges are excepted from avoidance because they " encourage creditors to continue doing business with troubled debtors who may then be able to avoid bankruptcy altogether," and " because other creditors are not adversely affected if the debtor's estate receives new value." Id. To qualify for this exception, the creditor transferee must prove that an otherwise preferential transfer was " (A) intended by the debtor and the creditor ...