April 6, 2020, Southern District of Texas, Houston – Joshua Searcy, the Plan Administrator of the estate of Debtor EMAS Chiyoda Subsea, Inc. (“EMAS Subsea”) brought an adversary proceeding against Defendant Pharma-Safe Industrial Services, Inc. (“Pharma-Safe”) to avoid and recover a $39,168.32 payment under 11 U.S.C. §§ 547 and 550. Pharma-Safe failed to timely respond to the Plan Administrator’s complaint and the Plan Administrator filed a motion for default judgment. Subsequently, Pharma-Safe filed its first response and later the Plan Administrator filed the motion for summary judgment before the Court.
The Court granted the Plan Administrator’s motion for summary judgment. Upon review, the Court found that the Plan administrator satisfied the requirement of 11 U.S.C.S. § 547(b)(2), as he showed that the payment was made for or on account of goods or services previously provided by Pharma-Safe to the Debtor. The Court further found that Pharma-Safe received a transfer of money that diminished its claim against what would become the bankruptcy estate and thus, it was to or for the benefit of a creditor for purposes of § 547(b)(1). The Court next concluded that the payment was made within the preferential period for purposes of § 547(b)(4). Further, insolvency presumption of § 547(f) applied, as Pharma – Safe did not file a response to the motion for summary judgment. The Court also held that Section 547(b)(5) was satisfied, as any payment received during the preference period would have allowed a creditor to recover more than it would have in a Chapter 7 liquidation and finally Pharma-Safe was an initial transferee for purposes of 11 U.S.C.S. § 550(a)(1).
Accordingly, the Court ruled that the Plan Administrator may recover the $39,168.32 avoided preference from Pharma-Safe under § 550(a)(1)