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Trustee Can Not Recover the Transfers Made by the Debtor’s President to Himself For Lack of Evidence

Rentas v. Gomez (In re Indrescom Sec. Tech. Inc.), No. 12-07047, 2016 Bankr. LEXIS 3618 (U.S. Bankr. D.P.R. Oct. 4, 2016)
The Trustee brought an adversary proceeding to avoid and recover transfers made by Defendant Jose A. Rodriguez Gomez, the president of Debtor Indrescom Security Technology, Inc. to himself, alleging that these transfers were preferential in nature. The Trustee contended that the Debtor made the alleged payments to Gomez as a creditor of the Debtor on account of the previous debt. The Defendant asserted that the alleged transfers were not preferences as they were used to pay the salaries of the Debtor’s employees and hence neither he was a creditor nor had any antecedent owed.

The Court found that the first requirement under §547(b)(1) was not satisfied. The Court reasoned that the evidence referenced by the trustee, i.e., copies of the canceled checks, its statement of uncontested facts, several bank statements from the Debtor’s commercial account, etc. were not sufficient enough to prove that the Defendant was a creditor with a claim against the Debtor. Next, the Court found the Trustee’s statements regarding the antecedent debt requirement contradictory. On the one hand, the Trustee denied that the alleged transfers were used to pay the employees’ salaries and on the other hand, relied on the Defendant’s defense under §547(c) (1),(2) to evince the first two elements of the alleged preferential transfers. Thus, the Court concluded that no sufficient evidence was presented to prove that the Defendant was the Debtor’s creditor and that such payments were on account of an antecedent debt. Since the Trustee failed to prove the first two elements of §547(b), the Court did not analyze further on remaining elements and ruled that the alleged transfers were not preferences within the meaning of §547(b).


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