Velde v. Border State Bank, No. 12-6033 (8th Cir. 2012)
Annotate this CaseThis was a preference action under 11 U.S.C. 547 by the Chapter 7 trustee to recover a payoff payment to Border State Bank from proceeds of debtor's liquidation sale. The bankruptcy court denied the Bank's motion for summary judgment, holding that the perfection of the Bank's lien was within the perfection period under section 547(b) and that the floating lien defense in section 547(c)(5) did not provide a defense to a security interest that was actually perfected during the preference period. The Bankruptcy Appellate Panel (BAP) held that the bankruptcy court did not err in holding that section 547(c)(5) did not apply and in thus ruling in favor of the trustee on the Bank's motion for summary judgment; the bankruptcy court did not err in holding that liquidation as part of the cessation of debtor's business was not ordinary course; and the bankruptcy court did not err in rejecting the Bank's new value defense. The court also held that payment to the bank of funds which were held in debtor's account at the Bank at the start of the liquidation period was not a preferential transfer or an improper setoff. However, the Bank should be required to pay for the services it hired to analyze its own best strategy and the court committed clear error in giving it credit for that expenditure.
Court Description: Bankruptcy Appellate Panel. The bankruptcy court did not err in rejecting the bank's "floating lien" defense under Sec. 574(c)(5), its "ordinary course of business" defense under Sec. 547(c)(2) or its "new value" defense under Sec. 547(c)(4); bankruptcy court correctly found that payment to the bank of funds which were held in debtor's account at the bank at the start of the liquidation period was not a preferential transfer or an improper setoff; bankruptcy court did err in giving the bank a credit for a consulting fee it paid to a retail liquidator, and that sum should be deducted from the judgment.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.