As more fully explained in COLLIER :See generally 220 B.R. 331 (Bankr. W.D. Tex. 1998).Id. at 335.
The Eleventh Circuit in Int'l Admin. Servs. particularly relied on Judge Schwarzer's Richmond Produce decision resolving a Northern District of California bankruptcy appeal, which held that a trustee who demonstrates that a transfer is avoidable "may seek to recover against any transferee, initial or immediate, or an entity for whose benefit the transfer is made" and which explained that an interpretation of § 550 mandating actual avoidance of initial transfers "conflates [the Bankruptcy Code's] avoidance and recovery sections." Kendall v. Sorani (In re Richmond Produce), 195 B.R. 455, 463 (N.D.Cal. 1996) (Schwarzer, J.), quoted with approval, Int'l Admin. Servs., 408 F.3d at 706; accord, Durkin v. Shields (In re Imperial Corp. of Am.), 1997 WL 808628, at *4 (S.D.Cal. 1997); Crafts Plus +, Inc. v. Foothill Capital Corp. (In re Crafts Plus +, Inc.), 220 B.R. 331, 335-38 (Bankr.W.D.Tex. 1998). Judge Markell was persuaded by, and adopted, the Int'l Admin. Servs. and Richmond Produce analyses.
The court thoroughly examined many preference actions, including the 10th Circuit's opinion in Slack-Horner, cited to the Court by the Trustee in this case, and stated: 220 B.R. 331 (Bankr. N.D. Tex. 1998).Id., 220 B.R. at 334.
Section 550(a) defines the partyfrom whom a trustee, or the Committee in this case, may seek to recover the property preferentially or fraudulently transferred or the value or proceeds of such property. Anton Noll, 277 B.R. at 878; Crafts Plus+,Inc. v. Foothill Cap. Corp. (In re Crafts Plus+, Inc.), 220 B.R. 331, 334 (Bankr. W.D. Tex. 1998). It "enunciates the separation between the concepts of avoiding a transfer and recovering from the transferee."
Notinger v. Brown, 2008 WL 2115200, at *10 (citing In re Felt Mfg. Co., Inc., 371 B.R. at 625 (citing Richardson v.United States (In re Anton Noll, Inc.), 277 B.R. 875, 878 (B.A.P. 1st Cir. 2002); Crafts Plus+, Inc. v. Foothill Cap. Corp. (In re Crafts Plus+, Inc.), 220 B.R. 331, 334 (Bankr.W.D.Tex. 1998))). "It 'enunciates the separation between the concepts of avoiding a transfer and recovering from the transferee.'"
Section 550(a) defines the party from whom a trustee may seek to recover the property fraudulently transferred or the value or proceeds of such property. Felt, 371 B.R. at 625 (citing Richardson v. United States (In re Anton Noll, Inc.), 277 B.R. 875, 878 (B.A.P. 1st Cir. 2002); Crafts Plus+, Inc. v. Foothill Cap. Corp. (In re Crafts Plus+, Inc.), 220 B.R. 331, 334 (Bankr. W.D. Tex. 1998)). It "enunciates the separation between the concepts of avoiding a transfer and recovering from the transferee."
Put simply, § 547(b) specifies a type of transfer that may be avoided by a bankruptcy trustee. SeeCrafts Plus+, Inc. v. Foothill Capital Corp. (In re Crafts Plus+), 220 B.R. 331, 334 (Bankr.W.D.Tex.1998). Separately, § 550 identifies the parties against whom a trustee may recover the avoided transfer for the benefit of the estate.
Put simply, § 547(b) specifies a type of transfer that may be avoided by a bankruptcy trustee. See Crafts Plus+, Inc. v. Foothill Capital Corp. (In re Crafts Plus+), 220 B.R. 331, 334 (Bankr. W.D. Tex. 1998). Separately, § 550 identifies the parties against whom a trustee may recover the avoided transfer for the benefit of the estate.
The Trustee's counterargument rests on cases that have allowed an avoidance and recovery action to be brought against a subsequent transferee without first avoiding the transfer to the initial transferee in the same chain of transactions. See Trustee's Supp. Br. Liens ¶ 12, at 6–7, ECF No. 61 (citing IBT Int'l, Inc. v. Northern ( In re Int'l Admin. Servs., Inc.), 408 F.3d 689, 705 (11th Cir.2005) (explaining the mere conduit rule); Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 480 B.R. 501, 520–23 (Bankr.S.D.N.Y.2012) (allowing avoidance and recovery actions to proceed concurrently); MC Asset Recovery LLC v. Commerzbank AG ( In re Mirant Corp.), Case No. 03–046590, Adv. No. 05–04142, 2010 WL 8708772, at *35 (Bankr.N.D.Tex. Apr. 22, 2010) (applying the mere conduit rule); Crafts Plus+, Inc. v. Foothill Capital Corp. ( In re Crafts Plus+, Inc.), 220 B.R. 331, 335–38 (Bankr.W.D.Tex.1998) (holding that not every beneficiary of a transfer must be joined in an avoidance and recovery action); Kendall v. Sorani ( In re Richmond Produce Co., Inc.), 195 B.R. 455, 463 (N.D.Cal.1996) (“[O]nce the trustee proves that a transfer is avoidable under section 548, he may seek to recover against any transferee, initial or immediate, or an entity for whose benefit the transfer is made.”)). However, none of the cases the Trustee has cited support the proposition that a trustee in bankruptcy may avoid a transfer in an entirely different chain of transactions without proceeding against any party in that chain.
In an effort to avoid the plainly obvious deficiencies with its res judicata argument, the Trustee asserts that who may be liable “is a completely separate concept” from whether the transfer is avoidable. ( See Dye Opening Brief at 17) (citing In re Crafts Plus+, Inc., 220 B.R. 331, 338 (Bankr.W.D.Tex.1998) (“ § 547 focuses exclusively on the transfer, not the creditor or beneficiary.