Bankruptcy Trustee’s Avoidance Rights Are Nearly Limitless

Posted on October 23rd, 2012

Joshua S. Bauchner, Esq. recently published an article in the national online journal, Law360, entitled “Bankruptcy Trustee’s Avoidance Rights Are Nearly Limitless”  The article addresses Section 550 of the Bankruptcy Code which applies where the trustee, having already avoided a transfer of some property, seeks to recover that property. Under those circumstances, the recovery must be “for the benefit of the estate.” This requirement does not apply, however, where the trustee seeks only to avoid an obligation that the debtor incurred, which does not require any recovery to the estate. Additionally, Section 550 does not limit the amount of avoidance to a creditor’s claim permitting recovery of a transfer or negation of an obligation in its entirety.  These considerations provide a trustee with extraordinary flexibility and range when pursuing claims under sections 544 and 548 of the Code.

Please click here to read Mr. Bauchner’s article in its entirety.