Margaret Adeline Veltre v. Fifth Third Bank

§547(b) of the Bankruptcy Code permits a debtor-in-possession to avoid a preferential transfer. The Bankruptcy Code defines a preferential transfer as a property transfer made within 90 days prior to a bankruptcy filing if the debtor was insolvent at the time of the transfer, if that transfer was made to a creditor on account of an antecedent debt, and if that transfer enabled the creditor to receive more than it would have received in a hypothetical Chapter 7 bankruptcy where the transfer never occurred and the creditor received payment of its debt to the extent provided by the Bankruptcy Code. In this case, a creditor of Ms. Veltre, respondent Fifth Third Bank, transferred her residence to itself by purchasing it at a sheriff’s sale. The transferred occurred within ninety days prior to Ms. Veltre’s Bankruptcy filing. The residence had a fair market value of $196,000, but was sold at sheriff sale for $90,000 to one of the debtor’s prepetition creditors. As the result of the sale the debtor’s other prepetition creditors including the IRS will receive nothing, while if the sale was set aside and the property marketed, these creditor would receive payment of their claims in full.