  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
the right of subrogation (which may not cure the Deprizio issue)). Given the potential for the application of Deprizio to unperfected security interests, as noted above, counsel may wish to consider continuing to include a "Deprizio waiver" in financing documents where an insider guarantor is involved.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 [Senate Bill 256] (the "Act") was signed into law by President Bush on April 20, 2005. Among other things, the Act addresses the remaining issue under Deprizio. New section 547(i) has been added to the Bankruptcy Code to provide that "[i]f the trustee avoids under subsection (b) a transfer made between 90 days and one year before the date of the filing of the petition, by the debtor to an entity that is not an insider for the benefit of a creditor that is an insider, such transfer shall be considered to be avoided under this section only with respect to the creditor that is an insider." 11 U.S.C. S 547(i). This additional "fix" to the Deprizio insider preference issue appears to be directed towards the late perfection issue identified in the Williams case discussed above. It remains to be seen whether practitioners will continue to insist on so-called "Deprizio waivers."
Even though section 550 permits the trustee to recover estate property from multiple sources, the trustee may not recover more than the value of the property transferred. 11
U.S.C. S 550(d). Because section 550(a) is intended to put the debtor back into the position it would have been in had the transfer not been made, it would be inappropriate and inequitable to permit the estate to recover more than the value of the property transferred. This prohibition against multiple recoveries has also been invoked to prevent the trustee from recovering twice from a single transferee under section 550(a). Cybridge, 312 B.R. at 268. In Cybridge, the court concluded that since the estate had already recovered the sum that the trustee would later seek in an avoidance action, the trustee could not also pursue an avoidance action to recover the actual preferential transfer because this would enable the estate to obtain a second satisfaction. Id. at 270.
Above, the section discussed the conduit theory with regards to its use as an equitable defense to avoid the unfairness that might result from a literal application of section 550(a). In some cases, however, the conduit theory is used offensively in an effort to designate an intermediary transferee as nothing more than a conduit of estate property. See Granada, 156 B.R. at 307; Kaiser, 110 B.R. 514. Thus, by designating the intermediary transferee a conduit, the trustee is typically seeking to recover from an entity with deeper pockets by preventing that entity from utilizing section 550(b). Today, with the growing complexity of companies filing for bankruptcy, and the intricacies of cash management systems, courts and interested parties need to be extra careful when analyzing voidable preferences. In Granada, a dispute arose out of a particular management practice carried out by the general partner (Granada). As the partnership's
