On July 27, 2011, the U.S. Bankruptcy Court for the Northern District of Texas in Whittle Development Inc. v. Branch Banking & Trust Co. (In re Whittle Development Inc.)1 issued an opinion finding that a debtor may avoid as a preferential transfer under Bankruptcy Code section 547 a prepetition real property foreclosure sale, even if the foreclosure sale complied with state requirements for a valid foreclosure. Whittle is significant not only because it throws into question the long-accepted notion that foreclosure sales are sacrosanct and their results final, but also because it represents a departure from Supreme Court precedent in the related area of fraudulent transfers under Bankruptcy Code section 548.
Prepetition Transfers
The Bankruptcy Code provides a number of tools that a debtor may use to avoid and recover prepetition transfers that favor one creditor to the detriment of other creditors, including Bankruptcy Code sections 547 and 548.
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