Bankruptcy Trustee’s Avoidance Rights Are Nearly Limitless

Law360, New York (October 22, 2012, 12:34 PM EDT) -- Section 550 of the Bankruptcy Code 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...
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