The entry of the Judgment of Foreclosure and Sale only gave the WHA the authority to foreclose on its existing secured claim and therefore did not give the WHA more than it would receive in a hypothetical chapter 7. See French v. State Farm Mut. Auto. Ins. (In re LaRotonda), 436 B.R. 491, 496 (Bankr. N.D. Ohio 2010) ("[A]ny prepetition transfer made to a secured claimant will ordinarily only provide such a creditor with consideration to which it was otherwise entitled to receive, thus negating the preferential aspect of the transfer for purposes of § 547(b)(5)."); O'Neill v. Dell (In re O'Neill), 204 B.R. 881, 892 (Bankr. E.D. Pa. 1997) ("[A] substantially oversecured creditor . . . would receive full payment in a Chapter 7 liquidation. Therefore, in order to meet its necessary burden of proving all of the elements of § 547(b), including § 547(b)(5), the [d]ebtor was obliged to prove that the defendant is either an unsecured or an undersecured creditor.
35. Under Bankruptcy Code Section 547(b)(5), the burden of proof is on the Committee to show that Tennenbaum was under-secured. Batlan v. TransamericaCommer. Fin. Corp. (In re Smith's Home Furnishings, Inc.), 265 F.3d 959, 963-64 (9th Cir. 2001) (stating that transfers to fully-secured creditors are generally not preferential because fully-secured creditors are entitled to recover 100 percent of their claims in a liquidation); Lease-A-Fleet v. Wolk (In re Lease-a-Fleet, Inc.), 151 B.R. 341, 348 (Bankr. E.D. Pa. 1993) (plaintiff in a preference action must prove defendant is unsecured or undersecured); O'Neill v. Dell (In re O'Neill), 204 B.R. 881, 892 (Bankr. E.D. Pa. 1997) (same). Section 547(b)(5) is not a defense to a preference; rather it is a fundamental component of the case-in-chief of a preference claim, and, under Section 547(g), the burden of proof on every element of Section 547(b) is on the Committee. Mellon Bank, N.A., 945 F.2d at 642; Golden v. The Guardian (In re Lenox Healthcare, Inc.), 343 B.R. 96, 107 (Bankr. D. Del. 2006) (trustee must establish each element of section 547(b), including section 547(b)(5)); IT Litigation Trust v. Alpha Analytical Labs (In re IT Group, Inc.), 331 B.R. 597, 601 (Bankr. D. Del. 2005) (creditor's committee, as plaintiff, had burden of proving each of the elements under 547(b)).
It is counterintuitive to allow Debtor to forego utilizing her rights under state law to object to the proposed distributions to specific third parties (the City and PGW) and then bring a preference action to have the entire Sheriffs Sale avoided affecting the rights of the Bank as foreclosing creditor and innocent purchaser. See In O'Neill v. Dell (In re O'Neill), 204 B.R. 881, 893 (Bankr. E.D. Pa. 1997) (concluding that it would be "counterintuitive to allow the Debtor to forego the appropriate means [under state law] for adjusting the amount of the [foreclosure] judgment and instead parlay this slight error against him into a preference claim."). Section 547 provides, in pertinent part,
See also, In re Prince Gardner, Inc., 220 B.R. 63, 66 (Bankr.E.D.Mo. 1998) (citing BFP, 511 U.S. at 548, 114 S.Ct. 1757 ("[i]n the vast majority of asset transfers other than real estate foreclosure sales, the Bankruptcy Courts can determine worth and reasonably equivalent value by referring to the common-law notion of fair market value")); see also Barber v. Golden Seed Co., Inc., 129 F.3d 382, 387 (7th Cir. 1997); Inre R.M.L. (Mellon Bank v. Official Committee of Unsecured Creditors), 92 F.3d 139, 149 (3d Cir. 1996); In re Ozark Restaurant Equipment Co., Inc., 850 F.2d 342, 345 (8th Cir. 1988); In re Colonial Realty, 226 B.R. 513, 523 (Bankr.D.Conn. 1998); In re O'Neill, 204 B.R. 881, 887 (Bankr. E.D.Pa. 1997) (reasonably equivalent value means fair market value outside foreclosure context); In re Grigonis, 208 B.R. at 955. Fair market value, as defined by Mr. Kern in his Report and as established in the D/E/F block auction, is the legal standard for determining value in a proceeding to determine whether there has been a constructive fraudulent conveyance.
Id. See also In re O'Neill 204 B.R. 881 (Bankr.E.D.Pa. 1997) (foreclosure sale). The only defect alleged by the Plaintiff in the tax sale procedure was that the minimum bid prepared by the IRS was deceptive and not prepared in accordance with the IRS manual.
BFP v. Resolution Trust Corp., 511 U.S. 531, 544-46, 114 S.Ct. 1757, 1764-66, 128 L.Ed.2d 556 (1994). See In re O'Neill, 204 B.R. 881, 886-87 (Bankr.E.D.Pa. 1997). Thus, the Court, in BFP, concluded that "reasonably equivalent value" in the context of a foreclosure sale means "the price in fact received at the foreclosure sale, so long as all the requirements of the State's foreclosure law have been complied with."