In action under 11 USC section 547(b)(4)(A) by plaintiff-Trustee seeking to recover $3,700 that debtor had paid to defendant-creditor pursuant to garnishment order during 90-day period prior to debtor filing bankruptcy petition, Bankruptcy Ct. erred in dismissing Trustee’s application for recovery of said payments, where Bankruptcy Ct. found that under Coppie, 728 F.2d 951, as matter of Indiana law, instant transfer of money to defendant occurred when garnishment order was entered, which was beyond applicable 90-day period. Under Barnhill, 503 U.S. 393, federal law, and not state law, defined meaning of “transfer” under section 547, and that under federal law, “transfer” occurs when money passes to creditor’s control. As such., Ct. of Appeals overruled Coppie and found that Trustee had viable cause of action to seek recovery of money actually paid to defendant-creditor during relevant 90-day period.
Federal 7th Circuit Court
Civil Court
Bankruptcy