Section 6.1 Introduction: Avoidance Powers

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

I. (§6.1) Introduction: Avoidance Powers

The Bankruptcy Code, 11 U.S.C. §§ 101 et seq., provides a trustee (or Chapter 11 debtor-in-possession having the rights and powers of a trustee under 11 U.S.C. § 1107) with power to avoid certain transfers and recover the property or its value for the benefit of the estate. These “avoidance powers” are found in 11 U.S.C. §§ 544–551. The powers represent a trade-off for unsecured creditors, who are given the benefit of having property brought into the estate that could have been available to them as of the date of the bankruptcy filing, in exchange for having their debts discharged and receiving a pro rata distribution from the estate. In re Vanguard Airlines, Inc., 295 B.R. 908, 915 (Bankr. W.D. Mo. 2003) (Venters, B.J.).

A trustee is permitted to avoid certain transfers made within 90 days (or 1 year, in the case of transfers to insiders) before the commencement of the case that have the effect...