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of the subsequent Chapter 7 trustee case under Section 726(b). This appears to violate the expressed provisions of the Bankruptcy Code and should not be authorized by the Bankruptcy Court. Practitioners should be aware of the case Shapiro v. Saybrook Manufacturing Co., Inc. (In re Saybrook Manufacturing Co., Inc.), 963 F.2d 1490 (11th Circ. 1992), in which the Eleventh Circuit held that certain cross-collateralization provisions of a debtor in possession financing arrangement not authorized by the Bankruptcy Code and thus, were not protected by the Section 364(e) good faith provisions. Where a DIP facility proposes to alter the relevant priorities prefaced elsewhere in the Code, a similar argument may be made by a disgruntled creditor or creditors' committee.
In a Chapter 7 proceeding, the debtor's priority to avoid a preference is limited to the amount of the exemption available to that debtor. See DeBarros v. Nat'l City Bank (In re De Barros), 275 B.R. 251 (Bankr. D. Md. 2002). In Maus v. Joint Township District Memorial Hospital (In re Maus, 282 B.R. 836 (Bankr. N.D. Ohio 2002), the court authorized a debtor in a Chapter 7 case to utilize the trustee's avoidance powers if the conditions of section 522 were met. However, a Chapter 13 case, the court in Montoya v. Boyd (In re Montoya), 285 B.R. 490 (Bankr. D.N.M. 2002), found that the Chapter 13 debtor did not have the authority to bring an action under section 548 of the Code to avoid a fraudulent transfer. See also Danley v. United States ex rel. IRS (In re Danley), 180 B.R. 291 (Bankr. W.D. Okla. 1995) (Chapter 7 debtor did not have standing to pursue avoidance action against the United States - only the trustee had standing).
F. Section 550 of the Bankruptcy Code.
The power of a trustee or debtor in possession to recover property depends on section 550 of the Bankruptcy Code. Dobin v. Presidential Fin. Corp. of Del. Valley (In re Cybridge Corp.), 312 B.R. 262, 267-68 (D.N.J. 2004). In particular, section 550(a) provides:
Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or 724(a) . . . the trustee may recover for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from -
a. the initial transferee of such transfer or the entity for whose benefit such transfer was made; or
11 U.S.C. S 550(a) (these transferees are typically referred to as "subsequent
