X.   § 60a provided stated in that respect:

". . . for or on account of an antecedent debt . . ."

XI.   § 547(b)(2) provides:

". . .for or on account of an antecedent debt owed by the debtor before such transfer was made . . . " [italics added]

The antecedent debt language in the Senate bill paralleled § 60a, but had some additional language exempting payment by the debtor of tax liabilities under the Senate's version of § 547(b)(2), regardless of their priority status. The House language without the reference to tax payments was adopted, instead, in the form of the existing § 547(b)(2). That language includes the phrase which is italicized, ". . . for or on account of an antecedent debt owed by the debtor before such transfer was made . . . "

There is no indication in the legislative history that the italicized phrase represented a general modification to the preference law, or emphasized an existing doctrine. The language, instead, seems specifically geared to an issue regarding tax payments. The Senate Report for the rejected version of § 547(b)(2) stated:⁽³⁷⁾

Subsection (b)(2) of this section in effect exempts from the preference rules payments by the debtor of tax liabilities, regardless of their priority status.

PREFERENCES-SECTION 547

Traditionally, the bankruptcy laws have allowed the trustee to recover for the benefit of the estate certain amounts (known as voidable preferences) that the debtor paid over to creditors within four months before the case began, at a time when he was insolvent. Among the prerequisites for recovery, the trustee must show that the transfer was made in satisfaction of a so-called "antecedent debt," due and owing at the time of the transfer. The present bankruptcy statute does not define the term "antecedent debt," but in practice the preference provisions have rarely been applied so as to invalidate the payment of taxes made within four months of bankruptcy.

S. 2266 clarifies present law by providing a specific exception under the preference provisions for any debt required to be paid under the Internal Revenue Code-unlike the House bill, under which Federal tax deposits, voluntary tax payments (including estimated taxes), and levies could arguably be viewed as voidable preferences. Had the provisions of H.R. 8200, as so interpreted, been in effect during fiscal 1976, the Government would have been required to turn over to trustees in bankruptcy up to $258 million.

We believe that the preference provisions of S. 2266 resolve an issue too important to be left to judicial construction.

      6 ABR 164   § 547(b)(2) which ultimately passed stated:⁽³⁹⁾

This provision will not apply to permit the trustee to recover estimated tax payments by a debtor, because no tax is due when the payments are made. Therefore, the tax on account of which the payment is made is not an antecedent debt. [italics added]

The House Report states that estimated taxes would not be treated as antecedent debt under its version of § 547(b)(2). This should not be interpreted as a general statement of legislative intent as to all types of debts that GPA can analogize to the rent payments in the present adversary proceeding. The date taxes are incurred, unlike other debts (such as rent), is specifically defined for preference purposes. Section 547(a)(4) provides:

[In this section] . . . a debt for a tax is incurred on the day when such tax is last payable, including any extension, without penalty.

I also conclude, on the basis of Bullion Reserve, Futoran, United Energy, and Upstairs Gallery, that the transfers in payment and the security agreement to secure the rent, maintenance reserves, and maintenance obligations in the preexisting leases are for "antecedent debt."

The GPA leases were executed years before the February 1995, security agreement. They contain monthly rent and maintenance reserve obligations, and an obligation to return the aircraft to GPA with certain substantial periodic maintenance having been performed to exacting FAA standards. The monthly rental terms of the seven jets averaged about $185,000 per month.⁽⁴¹⁾ The rental payments were not due until the month the aircraft was used. The maintenance reserve payments were due shortly after the month of usage based on such criteria as the number of hours operated or the number of takeoffs and landings.⁽⁴²⁾ Other maintenance obligations, including those due on the return of the aircraft (the return condition obligations) were called for in the existing leases. All these obligations, whether for current or future rent, maintenance reserves, or maintenance obligations, fit within the definition of "claim," and by analogy, to antecedent debt, under the 9^th Circuit cases.

Courts in other circuits have held that periodic rental payments for possession of the property and payments approximately current with that possession is not antecedent debt. Often, these cases are not § 547(b)(2)       6 ABR 166   cases, but cases under the pre-1984 version of § 547(c)(2)(B). I will discuss in Part 4.2 why I think the authorities upon which GPA relies are incorrect or distinguishable, as follows:

     4.2. Analysis of GPA's Authorities and History of Antecedent Debt Provision in Preference Law- The following sections under Part 4.2 of this Memorandum make these points:

XVII.	The pre-Code cases relied on by GPA for the proposition that current rent is not for antecedent debt contain only cursory statements to that effect, but have been followed by many modern bankruptcy courts without sufficient analysis;
XVIII.	The legislative history of § 60a of the Bankruptcy Act of 1898 which is the precursor of the current 11 USC § 547(b)(2), did not ascribe a definite meaning to the phrase       6 ABR 167   "antecedent debt" when adopting the phrase in the Chandler Act, but the legislative history of § 67d infers that the reference to "antecedent debt" used in that section came from the Uniform Fraudulent Conveyance Act of 1918, and the meaning was probably intended to be similar in both sections;
XIX.	A U.S. District Court in New York, in deciding whether a creditor has a "debt" for future rent under the New York fraudulent transfer statute (similar to 11 USC § 548(d)(2)(A) and § 67d(1) of the Act) held that a debtor-creditor relationship is created for future rent obligations;
XX.	The Bankruptcy Code recognizes a lessor of real estate may have a "claim" for future rent under 11 USC § 502(b)(6);
XXI.	The Bankruptcy Code's expansive definitions of "claim" and "debt" preempts GPA's argument that the court must look solely to cases interpreting the state law of New York which hold that a preexisting lease with monthly installments does not create a debtor-creditor relationship at its inception, but only when the current rent payments are due; and,
XXII.	While GPA cites authority under the Code, only a few are actually § 547(b)(2) cases, and those that adopt the "antecedent debt" argument of GPA too facilely accept the older case authority as gospel, without giving enough attention to the changes wrought by the Bankruptcy Code of 1978.

     4.2.1. The Pre-Code Cases Cited by GPA and In re Mindy's Do Not Hold Up - In the beginning there was Mindy's.⁽⁴³⁾ It is cited dozens of times in GPA's briefing, in which it croons, a-la Barry Manlow:⁽⁴⁴⁾ "How happy you made me, oh Mindy's." To which, I must sing the refrain: "But I sent you away, oh Mindy's."

The Court declines to follow the rationale advanced by the trustee that the debt was incurred at the time of the original signing of the lease obligations. The total lease obligation, at that point in time, was not due and payable--it was only due and payable as the lease term progressed and as the lessee occupied the premises subject to the leasehold in accordance with the terms of the lease. Contrary to the suggestion of the trustee, this situation is not analogous to payments on a long-term unsecured note obligation. An unexpired lease on real estate is treated as an executory contract under the Bankruptcy Code (11 U.S.C. § 365), a recognition of the principle that such lease involves an exchange of rights and obligations by the parties to the lease throughout its term. The concept of adequate assurance of future performance under a lease is separately provided for in the Bankruptcy Code because, unlike the payee on a long-term note obligation who merely accepts periodic payments from a payor, a lessor (or lessee in rarer circumstances) continues to supply to a lessee performance under the lease and, as rent is paid, continues to provide to the lessee the benefit of an on-going leasehold estate.

Historically, the payment of current rent has been held to rest upon current consideration and thus did not constitute a preference under previous bankruptcy law. See In re Barrett, 6 Am.Bank.Rep. 199 (S.D.N.Y.1901); In re Lange, 3 Am.Bank.Rep. 231, 97 F. 196 [sic 197] (S.D.N.Y.1899); Matter of Louis J. Bergdoll Motor Co., 35 Am.Bank.Rep. 32, 225 F. 87 (E.D.Pa.1915); and In re Bowles, 14 Am.Bank.Rep. (N.S.) 133 (E.D.Neb.1928). While there has been some suggestion that current Bankruptcy Code provisions may in some manner alter the result reached in these cases (See Kaye, Preferences Under the New Bankruptcy Code, 54 Am.Bank.L.J. 197 at 204 n.11 (Summer, 1980)), this Court concludes that the present Bankruptcy       6 ABR 169   Code neither mandates nor sanctions such a result. See 4 Collier on Bankruptcy (15 Ed.) P 547.20 n.20.

²⁰See In re Barrett (Ref., N.Y.), 6 Am.B.R. 199; Matter of Bowles (Ref., Neb.), 14 Am.B.R. (N.S.) 133. See also discussion in Matter of Louis J. Bergdoll Motor Co. (D.C., Pa.), 35 Am.B.R. 32, 225 Fed. 87. But even the payment of current rent may not be used as a device to effect a preference. In re Lange (D.C., N.Y.), 3 Am.B.R. 231, 97 Fed. 196.

The issue in Mindy's was whether payment of current rent was entitled to an ordinary course of business exception under § 547(c)(2), as it       6 ABR 170   existed before an amendment in 1984. The court noted that four of the five elements of § 547(b) had been met, that there was a question about whether the trustee had established the antecedent debt element, and that the singular "disputed issue is whether or not the payments made by the trustee were on account of antecedent debt and whether the 45 day 'ordinary course of business' exception should apply to bar the trustee's recovery."⁽⁴⁹⁾

It is uncertain that the court ever ruled on the § 547(b)(2) issue per se, and the wording of the opinion belies a conclusion that it did. For example, the citation to the American Bankruptcy Law Review article⁽⁵⁰⁾ with which the judge in Mindy's disagreed was a discussion of § 547(c)(2), not the antecedent debt section, § 547(b)(2).

But, assuming that Mindy's did rule that current rent installments on a long-term lease are not antecedent debt under § 547(b)(2), I would have ruled exactly the opposite based on the expanded definition of "claim" and "debt" under the 1978 Code for the reasons stated in Part 4.1 of this Memorandum, and, also, because of the weakness of the authority cited by Mindy's.

Yet, as GPA notes, Mindy's begat many cases⁽⁵¹⁾ which cite it favorably, sometimes in dicta and often, where the parties conceded that the § 547(b)(2) antecedent debt element had been satisfied by the trustee, in a discussion of the application of the old § 547(c)(2) 45-day rule for an ordinary course of business exception to a preference claim. I will discuss these cases in Part 4.2.5 of this Memorandum.

Few, if any, of these cases concerned the amount of money - $15 million plus - involved in this proceeding. This warrants a deeper look at the pre-Code cases relied on by Mindy's with respect to antecedent debt, In re Barrett,⁽⁵²⁾ In re Lange,⁽⁵³⁾ Matter of Louis J. Bergdoll Motor Co.,⁽⁵⁴⁾ and In re Bowles.⁽⁵⁵⁾ These cases are not a strong foundation to determine that installment rent is not antecedent debt under § 547(b)(2). The entire "current rent" doctrine in these cases rest on a 200-word statement in Barrett, a 1901 referee's opinion, unsupported by authority.

These cases are, at best, cursory authority to GPA's passionate evocation that they represent some chiseled-in-stone doctrine supporting its position on the meaning GPA ascribes to "antecedent debt."

In re Barrett is a two-page opinion by a referee in bankruptcy. It involved a written lease with rent due in installments. Several installments were made within four months of the bankruptcy, but the case does not inform us of the due dates. At that time, a preference was governed by § 60a of the Bankruptcy Act of 1898. The referee held as the first reason for denying a preference (these are the 200 words supporting Mindy's):

The first is that a claim for rent payable in instalments under the usual forms of lease constitute several and independent transactions whenever each instalment of rent becomes due, so that upon payment of each instalment of rent the transaction between debtor and creditor or landlord and tenant is absolutely closed; and this particularly so, because of the legal rights and position of the landlord, who has the constant security of a return to him of possession of his freehold estate in case of default in payment by the instituting of summary proceedings for the possession of his property in case of such non-payment of rent; the transaction being closed upon the payment of rent at its maturity, a new liability distinct and separate from the old arises and the acceptance of payment by the landlord without a guilty knowledge, as in this case, is not the acceptance of a preference, because there is not that transfer of property or payment on account which is the foundation of the decision of the United States Supreme Court in the case of Carson, Pirie, Scott & Co., supra. [Note, the Pirie⁽⁵⁶⁾ case has nothing to do with rental payments, current or otherwise]

"Preferred Creditors- (a) A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class." [emphasis in opinion]

The statute in effect in 1901 did not mention "antecedent" debt per se, and was much looser than the current preference section, § 547(b). Further, there is no authority cited for the portion of the referee's opinion regarding "current rent." One would think, if the current rent rule was such a sacrosanct doctrine, the authority supporting it would be much stronger and based upon a more thorough analysis than found in this 98-year-old referee's opinion.

In re Bowles is even more obscure as authority for the cases cited by GPA in support of its position. It is also a referee's opinion. The bankruptcy and his landlord had entered into a five-year lease in 1925, with monthly rent of $225 per month. The lease provided that furniture and fixtures were collateral for the rent. The lease was not recorded until February 4, 1927, five days before an involuntary bankruptcy was filed. The landlord       6 ABR 174   claimed a security interest was filed. At that time, the debtor owed $929.18 in back rent (most of it accrued before February 4, 1927), but the furniture and fixtures were sufficient to cover that claim, if they were allowed as collateral for a secured claim.

The language used by the referee is almost diametrically opposed to GPA's position regarding the payment of current installment rent. The referee, not discussing installment rent for current possession, but analyzing whether a lien for future rent would survive a preference attack, held:⁽⁵⁷⁾

The demise of a leasehold estate constitutes a consideration for the lessee's undertaking to pay rent. Corpus Juris, volume 35, Section 397, p. 1145. The transfer was not one to secure a preexisting debt at the time the transfer was made. The lease created an obligation on the part of the lessee to pay rental in installments from month to month during the term of the lease, subject to the happening of the contingencies which would operate to relieve the tenant from payment of installments of rental thereunder, that is eviction by title paramount or by acts of the lessor, destruction or disrepair of the premises, the quitting of the premises by the lessee with the lessor's consent, or the assignment by the lessee of his term with the approval of the lessor so as to relieve the lessee from further obligation upon the lease. Matter of Roth & Appel (C. C. A., 2^nd Cir.), 24 Am. B. R. 588, 181 F. 667. There was, therefore, a present consideration at the time of the execution of the lease, subject to be defeated in part by the contingencies hereinbefore stated, which would operate to relieve the tenant from payment of the rent. None of the contingencies happened, the tenant (now bankrupt) occupying the premises until the appointment of a receiver. A transfer for a present or future consideration cannot be a voidable preference. (Collier on Bankruptcy,       6 ABR 175   13^th Edition, volume 2, p. 1278, and authorities cited).

The 1899 In re Lange opinion covers less than a page. A petition was filed against a debtor, lessee of a bakery, averring a preference in the payment of rent. No details are given. The court said: "Payment of rent by an insolvent is not necessarily a preference. But when it is done as a means and for the purpose of carrying on a business in fraud of creditors, it should be so regarded." Lange discusses none of the issues central to GPA's antecedent debt motion.

In Matter of Louis J. Bergdoll Motor Co., a 1915 opinion, the district judge adopted a referee's opinion verbatim. The referee offset against a priority rent claim of $11,700 by the landlord, the payment by the debtor of back rent totaling $1,500, which was made within four months of bankruptcy. Since the $1,500 was not for "current rent," but applied to back rent, the court affirmed the referee's decision that there was a preference.

The referee suggested that, had the rent been for current months, it would not have been a preference based on a classification analysis. That is, the decision did not turn on an antecedent debt issue. Rather, it dealt with a concept similar to the current § 547(b)(5) (that a creditor not receive a       6 ABR 176   greater distribution by the transfer than it would have been entitled to under a chapter 7) as it is applied to a fully secured creditor.

While the referee's opinion in Bergdoll noted that the creditor, in seeking to defend against the preference, had cited In re Barrett in support of its position, the referee did not appear to have based his opinion on the portion of the Barrett opinion involving payment of current rent being payment on a current account. Rather, he appears to base the decision on the second holding in Barrett that the landlord was in a special class, so that payment did not prefer him to the general unsecured creditors. The referee cited, "as regards current rent,"⁽⁵⁸⁾ the Belknap case,⁽⁵⁹⁾ also from the Eastern District of Pennsylvania.

The Belknap case involved distress for rent, back rent at that. Belknap held:⁽⁶⁰⁾

. . . the effect of the distress did not enable the landlord to obtain a greater percentage of his debt than any other creditor of the same class. There is no other creditor of the same class, for there is but a single landlord; and, as the claim for rent had priority over the claims of the general creditors, the distress did not enable the landlord to obtain a greater percentage of his debt.

The logic of Bergdoll is garbled. The referee did hold the if the payment had been for "current rent" it would not have been preferential, but since it was for back rent it was.⁽⁶¹⁾ While this may have been a reference back to Barrett, the structure of the opinion belies such an interpretation. Even if it was, the referee in Bergdoll offers no independent analysis of the concept of current versus antecedent rent, but merely cites the referee in Barrett.

In short, of all the pre-Code cases cited by Mindy's in support of its antecedent debt analysis, only a paragraph, unsupported by authority, in a 1901 referee's opinion discusses GPA's "current rent" theory in the context of GPA's argument to this court.

This occurred at a time when there were no statutory exceptions to the harsh wording to § 60a of the Bankruptcy Act. Judicial exceptions thus popped up to ameliorate harsh cases, like the "current rent" situation.⁽⁶²⁾ The 1978 Bankruptcy Code has alleviated the need to rely on such judge-made modifications of the bankruptcy statutes in the preference area.⁽⁶³⁾

Since the old cases cited by Mindy's appear to be weak support for its conclusion about antecedent debt, a review of the preference law under the Bankruptcy Act of 1898 may help in pinning down the historical basis of the current § 547(b)(2).

           6 ABR 178   4.2.2. A Search for the Meaning of "Antecedent Debt" in the Preference Law Before 1978- Section 547(b)(2) was fashioned in part after § 60a of the Bankruptcy Act of 1898, as amended by the Chandler Act in 1938, so a review of that pre-Code law and legislative history should be considered.

SEC. 60. [11 U.S.C. § 96] PREFERRED CREDITORS.--a. A person shall be deemed to have given a preference if, being insolvent, he has, within four months before the filing of the petition, or after the filing of the petition and before the adjudication, procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer to [of] any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of recording or registering of the transfer, if by law such recording or registering is required or permitted.

      6 ABR 179   SEC. 60. PREFERRED CREDITORS.

a. (1) A preference is a transfer, as defined in this Act, of any of the property of a debtor to or for the benefit of a creditor for or on account of an antecedent debt, made or suffered by such debtor while insolvent and within four months before the filing by or against him of the petition initiating a proceeding under this Act, the effect of which transfer will be to enable such creditor to obtain a greater percentage of his debt than some other creditor of the same class. [italics added]

Garrard Glenn, a widely quoted expert who actively wrote treatises on preference law in the 1930s and 1940s, offers the following analysis of antecedent debt under the Chandler Act version of § 60a:       6 ABR 180  

And here we may take up the point that was left loose in previous pages.[⁽⁷⁰⁾] When the Bankruptcy Act speaks of an "antecedent debt", it does not mean that the debt must have matured before the date of the transfer which is under question. What it means is an "antecedent debt" that has originated before the transfer, by virtue of a previous transaction. A transfer, therefore may well be preferential although the obligation it is intended to secure has not yet fallen due, and this is illustrated by the case of principal and surety which we have under discussion. The principal's obligation of reimbursement (as distinct from exoneration) cannot arise until the guaranteed debt is due and the surety pays it. Until that happens, the surety has no provable claim against the principal's estate; but to margin an unmatured claim with security can be preferential, as these cases show.⁽⁷¹⁾

In describing the reason for the change to § 60a, the House Report indicates the concern was with the portion of § 60a akin to § 547(b)(5),       6 ABR 181   the "greater proportion" test. The report gives as the reason for the Chandler Act amendment to § 60a:⁽⁷³⁾

(a) Definition of preference.

Present section 60a: The language of the present law is cumbersome, and the definition of a preference is not a scientific one. If literally construed, the percentage test may be restricted to the situation existing at the time the transfer is made. Some courts have, in fact, adopted such literal construction. However, the preferential nature of the transfer should be tested rather by the ultimate result, which is the view taken by other courts. The conflict has recently been settled by the Supreme Court in the case of Palmer Clay Products Co. v. Brown (56 S. Ct. 450, 80 L. Ed. 466), in favor of the retrospective construction. It is therefore deemed advisable to eliminate the overlapping, discard the present cumbersome phrasing, and state the law more accurately, scientifically, and comprehensively. Section 60a as recast accomplishes this desirable result. The new test is more comprehensive and accords with the contemplated purpose of striking down secret liens. It is provided that the transfer shall be deemed to have been made when it has become so far perfected that neither a bona-fide purchaser nor creditor could thereafter have acquired rights superior to those of the transferee. As thus drafted, it includes a failure to record and any other ground which could be asserted by a bona-fide purchaser or a creditor of the transferor, as against the transferee. A provision also has been added which makes the test effective even though the transfer may never have actually become perfected.

Section 67(d)(1) defined a "fair" consideration for fraudulent transfer purposes to include the satisfaction of an antecedent debt:

d. (1) For the purposes of, and exclusively applicable to this subdivision d: . . .; and (e) consideration given for the property or obligation of a debtor is "fair" (1) when, in good faith, in exchange and as a fair equivalent therefor, property is transferred or an antecedent debt is satisfied, or (2) when such property or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared with the value of the property or obligation obtained. [italics added]

Section 67d copied almost verbatim substantial portions of the Uniform Fraudulent Conveyance Act of 1918. The UFCA had a section defining "fair consideration" which refers to "antecedent debt:"⁽⁷⁶⁾

§ 3. Fair Consideration.

Fair consideration is given for property, or obligation,

(a) When in exchange for such property, or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or an antecedent debt is satisfied, or

(b) When such property, or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared with the value of the property, or obligation obtained.

d. (1) For the purposes of, and exclusively applicable to this subdivision d: . . .(b) "debt" is any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent; (c) "creditor" is a person in whose favor a debt exists; . . .

The words and phrases used in this Act and in proceedings pursuant hereto shall, unless the same be inconsistent with the context, be construed as follows: . . .

(14) "Debt" shall include any debt, demand, or claim provable in bankruptcy; . . .⁽⁷⁹⁾

(11) "Creditor" shall include anyone who owns a debt, demand, or claim provable in bankruptcy, and may include his duly authorized agent, attorney, or proxy; . . .⁽⁸⁰⁾

Sunrise Industrial Joint Venture,⁽⁸¹⁾ a recent opinion by the U.S. District Court from the Southern District of New York, illustrates the significance of this history to refute GPA's position that the hoary old cases cited in In re Mindy's⁽⁸²⁾ should be adopted regarding the "current rent" issue. Sunrise       6 ABR 185   Industrial Joint Venture involved a suit by a landlord to avoid a fraudulent transfer by its tenant. The landlord sued the tenant and its parent company. One of the defenses was that the landlord was not a "creditor" as defined by New York law, and that there was no "debt" for such rent under New York fraudulent transfer law⁽⁸³⁾ - a statute having a definition of "creditor" and "debt" similar to the UFCA and § 67d(1) definitions I have just described.

The court distinguished In re Ryan's Estate⁽⁸⁴⁾ relied on by the defendants in Sunrise Industrial Joint Venture and by GPA in the present proceeding, and said:⁽⁸⁵⁾

The defendants contend that under New York law, a covenant to pay rent does not create a debtor-creditor relationship between a tenant and a landlord. In support of this proposition, the defendants rely on In re Ryan's Estate, . . . , and other cases relying on the authority of Ryan's Estate.

. . . .

. . . In particular, the court held [in Ryan's Estate]:

The covenant to pay rent creates no debt until the time stipulated for the payment * * * It is not a case of a debt complete when contracted, but of which the performance cannot be required till some future period. On the contrary, the obligation upon the rent is altogether contingent.

In the Court's view, the defendants' have misunderstood the definition of "creditor" and       6 ABR 186   "debt" under the New York fraudulent conveyance statute, as well as the applicability of Ryan's Estate to those definitions. The defendants would have the Court rule that a person is not a creditor, or an obligation is not a debt, under the fraudulent conveyance statute until the claim of the creditor actually accrues; that is, until the debt becomes due and owing. That, however, is contrary to the definition of the terms creditor and debt in the statute. Those terms are defined to include contingent and unmatured claims or liabilities.

. . . .

Indeed, Ryan's Estate undermines the defendants' contentions, because there the New York Court of Appeals held that rent was a "contingent obligation." Thus, although for the purposes of the law of trusts future rent may not be considered a "debt", for the purposes of the fraudulent conveyance statute it can be.

Moreover, the Court finds that the other cases relied upon by the defendants are inapposite. None of them deals with the issue of rent as a contingent debt or liability within the context of New York's fraudulent conveyance statute. [citations and emphasis omitted]

           6 ABR 187   4.2.3. Cases Cited by GPA Regarding New York State Law About When Current Rent Debt Accrues and the Old Bankruptcy Cases Dealing With Provability Are Not Persuasive- GPA contends the court must follow state law, the law of New York in this case, in determining whether current rent payments are payments for antecedent debt. This argument ignores the primacy of bankruptcy law where Congress does choose to address a subject, such as the definition of "debt" and "claim" under §§ 101(5, 12).

GPA cites cases, such as In re Roth & Appel, O. L. Schwencke Land & Investment Co. v Forster, Ryan's Estate, and Standard Oil of New Jersey, to support the proposition that current rent for current possession is not on account of antecedent debt.⁽⁸⁶⁾ Most of these cases relate only to the "current rent" question, and not whether a transfer like GPA's security agreement covers the big ticket kind of damages GPA seeks, like return condition damages.

GPA has conceded in its briefing and argument that if payment was even a day late, it was for antecedent debt.⁽⁸⁷⁾ While some of the payments were made timely under the original leases or the deferral agreement (only about $870,000 at this point), these payments are not saved from being "for antecedent debt" by the New York cases cited by GPA.

Sunrise Industrial Joint Venture⁽⁸⁸⁾ adequately refutes GPA's arguments supported by these cases, especially Ryan's Estate. Sunrise Industrial adopts an analysis similar to that espoused by the trustee in this proceeding. The trustee contends that the correct way to interpret § 547(b)(2) is to give an expansive definition to "claim" and "debt" to bring almost any obligation into its ambit, and let the transferee in a preference action, such as GPA, establish its defenses under § 547(c).

Some of the other cases cited by GPA, such as the 1910 case of In re Roth & Appel, and the 1918 case of O. L. Schwencke Land & Investment Co. v Forster, involve issues of provability of a lessor-creditor's claim. Under the 1898 Bankruptcy Act, a claim which otherwise was valid was not allowed to participate in dividends if it was not provable.⁽⁸⁹⁾

The provability concept was deleted from the 1978 Bankruptcy Code. Indeed, a lessor of land to a debtor may have a claim for damages for loss of future rent.⁽⁹⁰⁾ Rent claims for personal property leases, by analogy, are clearly allowable under the present Bankruptcy Code.⁽⁹¹⁾ If the issues presented in these cases had been presented under the Bankruptcy Code of       6 ABR 189   1978, any bankruptcy or appellate court would hold that a claim based on a preexisting lease for future rent is allowable to the extent the statute permits.

Standard Oil of New Jersey⁽⁹²⁾ is a 1935 case dealing with offsets and lack of mutuality and not a preference issue. While each of the cases cited by GPA about when a debt for rent accrues under New York law may be read in the abstract to support GPA's position, it is difficult to say why these old cases (all pre-Chandler Act, in fact) should govern the interpretation of antecedent debt with respect to current rent under § 547(b)(2).

While state law is often important in determining rights and duties under the Bankruptcy Code, the Code sometimes trumps state law,⁽⁹³⁾ including with respect to the definition of "antecedent debt."⁽⁹⁴⁾ For example, the 9^th Circuit has held that, even if state law allows full attorney fees where a contract provides for them, a specific bankruptcy code section addressing that issue limits them to reasonable attorney fees as part of a secured claim. In other words, federal law, in that case, preempted state law.⁽⁹⁵⁾

Likewise, the definition sections of §§ 101(5, 12) defining "claims" and "debt" preempt the narrow definition proposed by GPA.

           6 ABR 190   4.2.4. The Fact That a Lease is Involved is Not Adequate Grounds to Hold That GPA's Security Agreement Was Not for Antecedent Debt- GPA has argued repeatedly that the distinction in the cases it cites for its position is that they involve leases or executory contracts governed by § 365 of the Bankruptcy Code, whereas the trustee's cases generally involve secured transactions.⁽⁹⁶⁾ The fact that GPA was a lessor is not sufficient grounds under the current law to require a determination that the security agreement or the current rent payments were not for antecedent debt under § 547(b)(2).

An analysis of the historical distinction between leases and other debtor-creditor relationships appears in the legislative history to the 1978 Bankruptcy Code in relation to the cap on real estate rent claims proposed by § 502(b)(6). Although related to real estate, the comments appear apropos to all leases. The legislative history relates:⁽⁹⁷⁾

[3]-- History of Section 502(b)(6).

[a]-- History of Claims of Landlords Under the 1898 Act as Amended.

While from a strictly logical point of view there should be no need or justification to treat leases differently from other bilateral contracts, the development of a landlord's rights arising from the bankruptcy of a tenant led to so many deviations from the general law applicable to contractual rights in bankruptcy that leases of real estate were for many years considered to be sui generis. As       6 ABR 191   originally enacted, the Bankruptcy Act of 1898 contained no express provision for the provability of claims of landlords for rent which might accrue in the future. It was held that rent to accrue after the filing of the bankruptcy petition was incapable of proof as it was not a fixed liability absolutely owing but rather a demand contingent upon the occurrence of certain events. Although courts had recognized and admitted to proof in bankruptcy cases contingent claims and claims for anticipatory breach, rent owing a landlord was not similarly treated, for the courts consistently stopped short of extending the same liberality of view to claims based on breach of leases of real estate. In 1934, Congress made efforts to enact detailed provisions for both bankruptcy liquidation and reorganization proceedings in terms of conferring on future rent the status of a provable debt susceptible of liquidation.

     4.2.5. Analysis of Cases Cited by GPA Relating to § 547(b)(2) and Repealed § 547(c)(2)(B)- GPA cites a number of cases in support of its antecedent debt argument, at least as it applied to "current rent," an issue that appears to involve only about $870,000. It cites few, if any, cases and offers little analysis showing why the security agreement was not a transfer for antecedent debt with respect to claims based on the future maintenance charges, a significant proportion of the $15 million GPA claim. There is no       6 ABR 192   discussion as to why future maintenance obligations (such as the "return condition" obligations) debt should be governed by cases dwelling on a "current rent" analysis.

GPA's cases do not stand up to the trustee's arguments about how the 1978 Bankruptcy Code should treat the rent payments to GPA claims as they relate to § 547(b)(2). The Supreme Court in Union Bank v Wolas⁽⁹⁸⁾ implied that the 1978 Code provided a new framework for dealing with preferences, breaking with the judge-made exceptions to alleviate an inadequate § 60a of the Bankruptcy Act. The legislative history supports this, indicating § 547, in general, was a substantial departure to the treatment of preferences under the old law.⁽⁹⁹⁾

GPA can be amply protected from injustice by reference to the § 547(c) exceptions, without resorting to the distortion of the core definitions of what a "claim" is and when it arises.

I will discuss the principal cases cited by GPA, and indicate why I think they are wrong or not persuasive.

IN RE MINDY'S, INC.- I have already addressed In re Mindy's, Inc. in Part 4.2.1 of this Memorandum.

IN RE THOMAS W. GARLAND, INC.⁽¹⁰⁰⁾ - This was a bankruptcy court decision, which held that rent paid within 90 days of the bankruptcy under a preexisting lease was not subject to a preference recovery. The court noted that both the majority and minority in a case from the court's own 8^th Circuit, Iowa Premium Service Co.⁽¹⁰¹⁾ had relied on In re Mindy's, Inc. to say that a rent payment is not incurred until the due date, not the date of the lease. The majority in Iowa Premium Service Co. went so far as to say that interest payments on a long-term debt were not for antecedent debt, a view disavowed by the 9^th Circuit as noted in previous discussion at page 16. The discussion in Garland is terse and none of the underlying issues are analyzed.

IN RE CHILD WORLD⁽¹⁰²⁾ - This case involved an issue of when a payment by check for rent occurred - when it was tendered or when it cleared? The parties and the court agreed that monthly rent paid on the due date was not antecedent debt, so this was not a litigated issue. But, the court nonetheless stated its reasons for agreeing:

Here, the parties have stipulated for purposes of this motion that four out of the five elements of the preference algorithm are satisfied. They differ however on the second element, that is, whether the rental payments were made on       6 ABR 194   account of antecedent debt. The parties do not dispute the fact that the debt at issue was incurred on February 1, 1992. Indeed, it is well settled that the obligation to pay rent is deemed to arise on the due dates provided in the lease and not when the lease is signed. Bernstein v. RJL Leasing (In re White River Corp.), 799 F.2d 631 (10th Cir.1986) (citing In re Mindy's, Inc., 17 B.R. 177 (Bankr.S.D.Ohio 1982)); In re Upstairs Gallery, Inc., 167 B.R. 915, 918 (9th Cir. BAP 1994) (citing Coco., 67 B.R. at 370); accord M. Bienenstock, Bankruptcy Reorganization at 369 n. 59 (1987) (for ease of reference, Bienenstock at 369) (citing other cases).⁽¹⁰³⁾

IN RE WORKBOATS NORTHWEST, INC.⁽¹⁰⁴⁾- This case involved the payments for lease of a business premises. Although there had been a written lease, it eventually was not extended. The debtor, however, continued to occupy and pay rent.

This case involves a "subsequent new value" issue under § 547(c)(4) - whether a subsequent rent delinquency by debtor may be treated as "new value" under that section.

The court found that the prior lease had terminated already, so the rent debt did not arise from the written lease. An issue arose whether the debtor's continued possession was "new value" to the estate. In analyzing this, the court alluded to In re Mindy's, Inc., holding that leases are executory contracts⁽¹⁰⁵⁾ and that the obligation to pay rent accrued periodically, but not in the same type of factual or legal setting as Mindy's. Workboats is simply not close enough to the facts and issues involved in the GPA situation to offer it much support on the § 547(b)(2) question.

IN RE WHITE RIVER CORP.-⁽¹⁰⁶⁾ The parties in In re White River Corp. stipulated that all the elements of § 547(b) had been met, so whether there was an antecedent debt pursuant to § 547(b)(2) was not an issue. Rather the court ruled on the basis of the former version of § 547(c)(2) (the 45-day, ordinary course exception). At the time, the section read [italics added]:

(c) The trustee may not avoid under this section a transfer-

(2) to the extent that such transfer was--
(A) in payment of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee;

      6 ABR 196   (B) made not later than 45 days after such debt was incurred;

(C) made in the ordinary course of business or financial affairs of the debtor and the transferee; and

(D) made according to ordinary business terms; . . .

White River cited the In re Mindy's, Inc. reasoning with respect to § 547(c)(2)(B), and held that rent on a preexisting equipment lease was not incurred when the lease was entered into, but on the actual date the rent was due. Other courts have also cited cases decided under § 547(b)(2) as authority in deciding cases involving the former § 547(c)(2)(B), some of which are discussed in this part of this Memorandum.

The question in the present adversary proceeding is, if a narrow definition of when a debt is "incurred" for § 547(c)(2)(B) purposes is used, why should a broad one be used for § 547(b)(2)?

Luckily, § 547(c)(2) was amended in 1984 to alleviate the problem. Now the ordinary course of business exception only requires a defendant to show a transfer is in payment of a debt incurred in the ordinary course of the business or financial affairs of the debtor and transferee, and according to ordinary business terms. The current § 547(c)(2) does not focus on when the debt was incurred.

Had the problem with the initial wording not been alleviated, it would have been a situation where giving a literal effect to the words of the       6 ABR 197   statute would have lead to an unintended, absurd or impracticable result.⁽¹⁰⁷⁾ If "debt" in § 547(c)(2) were to be given the expansive reading, it would have virtually abrogated the exception to a preference intended to be granted. In such a case, the use of "debt" in § 547(c)(2)(B) could be treated as payment obligations coming up in the ordinary course of business, and not as defined in §§ 101(5,12), as discussed in Part 4.1.

The Supreme Court has before given differing meanings to the same words, even in the same section of the Bankruptcy Code.⁽¹⁰⁸⁾ This would have been another place to apply the same type of reasoning - interpreting "debt" differently in § 547(b)(2) and § 547(c)(2)(B).

Many of GPA's cases interpreting the legislative intent of the repealed § 547(c)(2)(B) appear to have used an analysis or rationalization similar to Mindy's, but, in fact, treated the meaning of "antecedent debt" differently in § 547(b)(2) than the meaning under § 547(c)(2)(B). This may explain why, in so many of the cases, the parties did not contest, or the court found, that the element of § 547(b)(2) has been satisfied. Logically, the same argument under § 547(b)(2) should have applied, if that is what Mindy's held, but the litigants seem to have understood that the legal issues under § 547(c)(2) were sufficiently different so that the existence of "antecedent debt" under § 547(b)(2) was not contested.       6 ABR 198  

Reliance on GPA's § 547(c)(2) cases to determine the § 547(b)(2) issue in the present case is an unwarranted stretch in light of the different statutory purposes of each section.

IN RE CLOTHES, INC.⁽¹⁰⁹⁾- This case involved the lease of a retail premises. The issue was whether several checks paid on October 8, 1980, and November 6, 1980, each cashed about five days later, qualified as an ordinary course of business payment under the former § 547(c)(2).

The court held that the elements of § 547(b)(2) had been satisfied. In sustaining the § 547(c)(2)(B) argument, the court referred to Mindy's, Barrett, Matter of Lewis J. Bergdoll Motor Co., and Bowles, all discussed in Part 4.2.1 of this Memorandum. I have just discussed § 547(c)(2)(B) previously in connection with the White River case.

IN RE COCO⁽¹¹⁰⁾- The court said that the case did not involve "current rent" for the premises involved, but if it had it would have held that the antecedent debt element of a preference case, § 547(b)(2), had not been satisfied. So, it is dicta.

The court gave its reasons for its dicta, citing the familiar litany of cases: In re Mindy's, Inc., In re Barrett, In re Lange, Matter of Louis J. Bergdoll Motor Co., In re White River Corp., In re Clothes, Inc., and In re Garland, all of which I have discussed.       6 ABR 199  

IN RE UPSTAIRS GALLERY, INC.⁽¹¹¹⁾- This is a 9^th Circuit Bankruptcy Appellate Panel opinion. The debtor had paid $38,000 to its landlord within 90 days of the debtor's chapter 11 bankruptcy in order to cancel the balance of a long-term written lease. The debtor brought a preference action to recover the $38,000.

The landlord claimed the payment was not for antecedent debt because it settled the future rent obligation of the debtor, apparently relying on bankruptcy court decisions from the Southern District of New York, In re Coco and In re Pan Trading, Inc.⁽¹¹²⁾ The court indicated that settling a future rent obligation in a termination agreement was not the same as paying current rent during a current period. The payment to settle the claims was for antecedent debt. This sounds similar to GPA taking a security interest to secure future lease obligations.

While the court acknowledged without criticism, but without specifically endorsing, the concept of "current rent" doctrine described in Coco and Pan Trading, it said that the BAP case did not involve current rent. In fact, the tenor of the opinion seems more favorable to the trustee's position that a debt is incurred under a lease when it is first entered into.       6 ABR 200  

There was an argument of the landlord that the debt really accrued at the time of the termination agreement and not the initial lease. The court disagreed, saying:

We hold that the debt in the instant case was incurred on April 29, 1988 [the date of the lease]. A contract which is unambiguous in its terms on which the parties have agreed governs the relationship between the parties. A later compromise of the claim does not affect the time when the debt first arose.

Although the substance of the termination agreement between Macklowe and Upstairs dealt with the termination of a lease agreement and cancellation of future liability thereunder, the agreement is analogous to a compromise or settlement agreement.

As of April 29, 1988, Macklowe had a claim for monthly rental payments and Upstairs had a liability relating to that claim, or in other words, a debt. This debt arose before the November 20, 1990, termination of lease agreement, and was therefore chronologically antecedent. Consequently, a common sense reading of § 547(b)(2) would indicate that the $38,532.36 settlement of the lease liability made on November 20, 1990, was for or on account of an antecedent debt owed by the debtor before such transfer was made.

     5. CONCLUSION:- GPA argues that 9^th Circuit case law⁽¹¹³⁾ is controlling, but can cite me no case on point inthis circuit holding for its       6 ABR 201   position that periodic rent payments made on the date due are not antecedent debt.

The more recent bankruptcy cases cited by GPA to support its position are not based on a solid foundation and ignore changes made by the Bankruptcy Code in the definitions of claim and debt. They appear to follow the pre-Code cases by habit rather than reason.

I will adopt the straightforward resolution of the trustee, outlined in Part 4.1 of this Memorandum, which results in my concluding that the rent and maintenance reserve payments made, and the security agreement granted, are for antecedent debt incurred under the long-term leases well before the 90-day preference period.

Because of the decision I have made, I have not addressed other arguments made by the trustee.

This Memorandum is a much expanded explanation of my previous oral ruling. The parties are working on an agreed form of order for entry.

Dated: September 24, 1999

HERB ROSS
U.S. Bankruptcy Judge

1.       6 ABR 145   Shorthand for plaintiffs and their predecessors.

2.       6 ABR 145   11 USC § 547(b)(2).

3.       6 ABR 146   11 USC § 547(c).

4.       6 ABR 146   11 USC § 101(5).

5.       6 ABR 146   11 USC § 101(12).

6.       6 ABR 146   See, documentary evidence stipulated to by the parties, and the brief of GPA as follows for a fuller exposition of the facts: First Evidentiary Stipulation Between Trustee and GPA, Docket Entry 56, filed August 12, 1998; and, Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), Docket Entry 20, filed July 3, 1997, by GPA, at pages 1-6.

7.       6 ABR 146   See, Table Identifying Summary Judgment Briefing, Docket Entry 179, filed August 27, 1999.

8.       6 ABR 147   Motion for Partial Summary Judgment Regarding Antecedent Indebtedness, Docket Entry 20, filed July 3, 1997.

9.       6 ABR 147   See, Table Identifying Summary Judgment Briefing, Docket Entry 179, filed August 27, 1999, Items D, E, F, G and H.

10.       6 ABR 147   Case No. A92-00476-HAR, MarkAir, Inc., an Alaska corporation, Chapter 11 Bankruptcy Petition filed June 8, 1992 (MarkAir I).

11.       6 ABR 147   See, Exhibit 1 to Affidavit of Spencer Sneed, attached to the Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), Docket Entry 20, filed July 3, 1997.

12.       6 ABR 148   Case No. A95-00236-HAR, MarkAir, Inc., an Alaska corporation, Chapter 11 Bankruptcy Petition filed April 14, 1995.

13.       6 ABR 148   Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), Docket Entry 20, filed July 3, 1997, at page 1, footnote omitted.

14.       6 ABR 149   GPA Distributions: Alternative Outcomes (Preliminary), Docket Entry 141 filed June 3, 1999 (see, chart titled "GPA Distributions: Alternative Outcomes").

15.       6 ABR 149   Trustee's Explanation of Economic Impact of GPA's Antecedent Debt Argument, Docket Entry 158, filed July 1, 1999.

16.       6 ABR 150   Mx = maintenance.

17.       6 ABR 151   See, Comparison of Date Due/Paid, analysis by the trustee in the second and third columns from the right representing the amounts paid current under the original and deferral agreements (copy attached to Proceeding Memorandum, Docket Entry 53, filed May 28, 1998).

18.       6 ABR 152   11 USC § 547(b); CHG International, Inc. v Barclays Bank (Matter of CHG International, Inc.), 897 F2d 1479, 1482 (9^th Cir 1990), abrogated on other grounds by Union Bank v Wolas, 502 US 151, 112 SCt 527, 116 LEd2d 514 (1991); Danning v Bozek (In re Bullion Reserve of North America), 836 F2d 1214, 1219 (9^th Cir 1988); and, Wyle v C.H. Rider & Family (In re United Energy Corp.), 944 F2d 589, 595 (9^th Cir 1991).

19.       6 ABR 153   Upstairs Gallery, Inc. v Macklowe West Development Co., L.P. (In re Upstairs Gallery, Inc.), 167 BR 915, 917 (9th Cir BAP 1994).

20.       6 ABR 153   11 USC §§ 101(5,12) (1999).

21.       6 ABR 154   Danning v Bozek (In re Bullion Reserve of North America), 836 F2d 1214 (9^th Cir 1988).

22.       6 ABR 155   Danning v Bozek (In re Bullion Reserve of North America), 836 F2d at 1219.

23.       6 ABR 155   Futoran v Rush (In re Futoran), 76 F3d 265 (9th Cir 1996).

24.       6 ABR 156   Futoran v Rush (In re Futoran), 76 F3d at 267.

25.       6 ABR 156   Wyle v C.H. Rider & Family (In re United Energy Corp.), 944 F2d 589 (9th Cir 1991).

26.       6 ABR 157   Wyle v C.H. Rider & Family (In re United Energy Corp.) at 595.

27.       6 ABR 157   National Motor Freight Traffic Association, Inc. v Superior Fast Freight, Inc. (In re Superior Fast Freight, Inc.), 202 BR 485, 488 (9^th Cir BAP 1996), cited in Footnote 39 of GPA's opening brief, Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), Docket Entry 20, filed July 3, 1997.

28.       6 ABR 158   Nolden v Van Dyke Seed Co., Inc. (In re Gold Coast Seed Co.), 751 F2d 1118 (9^th Cir 1985).

29.       6 ABR 158   CHG International, Inc. v Barclays Bank (Matter of CHG International, Inc.), 897 F2d 1479, 1483 (9^th Cir 1990), abrogated on other grounds by Union Bank v Wolas, 502 US 151, 112 SCt 527, 116 LEd2d 514 (1991); Collier on Bankruptcy, ¶ 547.04[2][b] (15^th ed rev 1999).

30.       6 ABR 160   Iowa Premium Service Co., Inc. v First National Bank in St. Louis (In re Iowa Premium Service Co.), 695 F2d 1109, 1111-12 (8th Cir 1982).

31.       6 ABR 160   CHG International, Inc. v Barclays Bank (Matter of CHG International, Inc.), 897 F2d 1479, 1482, 1486 (9^th Cir 1990) abrogated on other grounds by Union Bank v Wolas, 502 US 151, 112 SCt 527, 116 LEd2d 514 (1991).

32.       6 ABR 160   Carmack v Zell (In re Mindy's Inc.), 17 BR 177 (Bankr SD Ohio 1982), analyzed in greater detail in Part 4.2.1.

33.       6 ABR 160   Upstairs Gallery, Inc. v Macklowe West Development Co., L.P. (In re Upstairs Gallery, Inc.), 167 BR 915, 917 (9th Cir BAP 1994).

34.       6 ABR 161   See, In re Kuraishi, 237 BR 172, 175 (Bankr CD Cal 1999).

35.       6 ABR 161   See, e.g., Reply Brief on Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), at page 4, Docket Entry 39, filed January 23, 1998.

36.       6 ABR 162   HRS 2266, 95^th Congress, Second Session; see, Senate Report (Judiciary Committee), No 95-989, at page 87, July 14, 1978.

37.       6 ABR 162   Senate Report (Judiciary Committee), No 95-989, at page 87, July 14, 1978 [to accompany HRS 2366].

38.       6 ABR 163   Hearing on S. 2266-to Establish a Uniform Law on The Subject of Bankruptcies, Tuesday, November 29, 1977, Statement of Donald C. Lubick, Deputy Assistant Secretary for Tax Policy, U.S. Department of the Treasury.

39.       6 ABR 164   House Report (Judiciary Committee), No 95-959, at page 373, September 8, 1977 [to accompany HR 8200].

40.       6 ABR 164   Described in Drabkin v District of Columbia, 824 F2d 1102, 1109 fn 26 (DC Cir July 24, 1987).

41.       6 ABR 165   See, First Evidentiary Stipulation Between Trustee and GPA, Exhibits A-1 to A-7, Docket Entry 56, filed August 12, 1998, for copies of leases.

42.       6 ABR 165   Id.

43.       6 ABR 167   Carmack v Zell (In re Mindy's, Inc.), 17 BR 177 (Bankr SD Ohio 1982).

44.       6 ABR 167   See, Mandy by Barry Manlow.

45.       6 ABR 168   Carmack v Zell (In re Mindy's, Inc.), 17 BR at 179.

46.       6 ABR 169   3 (Part 2) Collier on Bankruptcy, ¶ 60.19, page 853 and fn 20 (14^th ed rev 1988).

47.       6 ABR 169   See, eg, Zelman v Esher (Matter of Mersick & Co.), 1 BR 599, 601 (Bankr D Conn 1979) [a case under § 60a of the Bankruptcy Act of 1898, as amended).

48.       6 ABR 169   See, cases cited by GPA in Table of Antecedent Debt Cases (GPA), Docket Entry 47, filed April 14, 1998.

49.       6 ABR 170   Carmack v Zell (In re Mindy's, Inc.), 17 BR at 178.

50.       6 ABR 170   Kaye, Preferences Under the New Bankruptcy Code, 54 AmBankLJ 197 at 204 n11 (Summer 1980).

51.       6 ABR 171   Thomas W. Garland, Inc. v Nooney Co. (In re Thomas W. Garland, Inc.), 28 BR 87, 89 (Bankr ED Mo 1983); Child World, Inc. v Service Merchandise Co., Inc. (In re Child World, Inc.), 173 BR 473, 476 (Bankr SD NY 1994); Brown v Morton (In re Workboats Northwest, Inc.), 201 BR 563, 567 (Bankr WD Wash 1996); Sapir v Eli Haddad Corp. (In re Coco), 67 BR 365, 370-371 (Bankr SD NY 1986); Bernstein v RJL Leasing (In re White River Corp.), 799 F2d 631 (10^th Cir 1986); and Armstrong v General Growth Development Corp. (In re Clothes, Inc.), 45 BR 419, 421 (Bankr D ND 1984); see, these and other cases cited in Table of Antecedent Debt Cases (GPA), Docket Entry 47, filed April 14, 1998.

52.       6 ABR 171   In re Barrett, 6 AmBankRep 199 (SDNY 1901).

53.       6 ABR 171   In re Lange, 3 AmBankRep 231, 97 F 197 (SDNY 1899).

54.       6 ABR 171   Matter of Louis J. Bergdoll Motor Co., 35 AmBankRep 32, 225 F 87 (ED Pa 1915).

55.       6 ABR 171   In re Bowles, 14 AmBankRep (N.S.) 133 (ED Neb 1928).

56.       6 ABR 172   Pirie v Chicago Title & Trust Co., 182 US 438, 21 SCt 906 (1901).

57.       6 ABR 174   In re Bowles at 139.

58.       6 ABR 176   Matter of Louis J. Bergdoll Motor Co., 225 F at 89.

59.       6 ABR 176   In re Belknap, 129 F 646 (ED Pa 1904).

60.       6 ABR 176   In re Belknap, 129 F at 648.

61.       6 ABR 177   Matter of Louis J. Bergdoll Motor Co., 225 F at 89.

62.       6 ABR 177   See, e.g., 3 (Part 2) Collier on Bankruptcy, ¶ 60.19 at page 851-853 and ¶ 60.23, Cash Transactions; Current Expenses; Payments on Account (14^th ed rev 1988).

63.       6 ABR 177   See, Part 4.1 of this Memorandum.

64.       6 ABR 178   Act of June 22, 1938, ch. 575, 52 Stat. 855.

65.       6 ABR 178   A copy of the Bankruptcy Act of 1898, as amended prior to enactment of the Chandler Act, can be found in 10 Collier on Bankruptcy, Appendix, page 1783 (14^th ed rev 1988).

66.       6 ABR 178   A copy of the Bankruptcy Act of 1898, as amended up to the date of enactment of the Bankruptcy Code of 1978 can be found in Appendix A Collier on Bankruptcy, App Pt 3(a), The Bankruptcy Act of 1898, Ch 6, Sec 60 (15^th ed rev 1999).

67.       6 ABR 179   Countryman, The Concept of Voidable Preference in Bankruptcy, 38 Vand LR 713, 724 and fn 83 (May 1985).

68.       6 ABR 179   Ward and Shulman, In Defense of the Bankruptcy Code's Radical Integration of the Preference Rules Affecting Commercial Financing, 81 Wash ULQ 1, 19-26 (quote at 19) (Spring 1983).

69.       6 ABR 179   See, e.g., In re Davidson, 109 F 882, 883 (SD Iowa 1901).

70.       6 ABR 180   Garrard Glenn, 2 Fraudulent Conveyances and Preferences, § 398, page 684, "For or on Account of Antecedent Debt" (Baker, Voorhis & Co. 1940).

71.       6 ABR 180   Garrard Glenn, 2 Fraudulent Conveyances and Preferences, at § 459, at page 777.

72.       6 ABR 180   HR Rep No 1409, 75^th Congress, 1^st Sess, page 3, Purposes of Bill (Revision of the National Bankruptcy Act) (July 29, 1937).

73.       6 ABR 181   HR Rep No 1409, 75^th Congress, 1^st Sess, at page 30.

74.       6 ABR 182   Id at page 92; see, also, § 67 as amended in 1938, reproduced in Vol A Appendix Collier on Bankruptcy, Part 3(a), Ch VII, Sec 67 (15^th ed rev 1999).

75.       6 ABR 182   Id at page 32.

76.       6 ABR 182   Uniform Fraudulent Conveyance Act of 1918, ULA, § 3.

77.       6 ABR 183   Uniform Fraudulent Conveyance Act of 1918, ULA, § 1.

78.       6 ABR 183   11 USC §§ 101(5, 10, 12).

79.       6 ABR 184   § 1(14) of the Bankruptcy Act of 1898, as amended.

80.       6 ABR 184   § 1(11) of the Bankruptcy Act of 1898, as amended.

81.       6 ABR 184   Sunrise Industrial Joint Venture v Ditric Optics, Inc., 873 FSupp 765 (EDNY 1995).

82.       6 ABR 184   See, analysis of In re Barrett, In re Lange, Matter of Louis J. Bergdoll Motor Co., and In re Bowles in Part 4.2.1.

83.       6 ABR 183   NY McKinney's Debtor and Creditor Law, § 270.

84.       6 ABR 183   In re Ryan's Estate, 294 NY 85, 95, 60 NE.2d 817 (1945).

85.       6 ABR 183   Sunrise Industrial Joint Venture v Ditric Optics, Inc., 873 FSupp at 771-72.

86.       6 ABR 187   In re Roth & Appel, 181 F 667, 669 (2^nd Cir 1910); In re Ryan's Estate, 294 NY 85, 95, 60 NE 2^nd 817, 821 (1945); O. L. Schwencke Land & Investment Co. v Forster, 171 NYS 140, 142 (NY App Term 1918); and Standard Oil Co. of New Jersey v Elliott, 80 F2d 158, 159 (4^th Cir 1935).

87.       6 ABR 187   See, Sapir v Eli Haddad Corp. (In re Coco), 67 BR 365, 370 (Bankr SD NY 1986).

88.       6 ABR 188   Sunrise Industrial Joint Venture v Ditric Optics, Inc., 873 FSupp 765, 771-72 (EDNY 1995), discussed in Part 4.2.2 of this Memorandum.

89.       6 ABR 188   4 Collier on Bankruptcy, ¶ 502 LH[1][b], "Eradication of the Concept of Provability" (15^th ed rev 1999); Upstairs Gallery, Inc. v Macklowe West Development Co., L.P. (In re Upstairs Gallery, Inc.), 167 BR 915, 917 (9th Cir BAP 1994).

90.       6 ABR 188   11 USC § 502(b)(6).

91.       6 ABR 188   See, 11 USC § 502(b)(6) relating to real estate leases.

92.       6 ABR 189   Standard Oil Co. of New Jersey v Elliott, 80 F2d 158 (4^th Cir 1935).

93.       6 ABR 189   Board of County Commissioners of Sedgwick County, Kansas v Coleman American Properties, Inc. (In re American Properties, Inc.), 30 BR 247, 249 (Bankr D Kan 1983), citing New York v New York, N.H. & Hartford R.R., 344 US 293, 73 SCt 299, 97 LEd 333 (1953).

94.       6 ABR 189   UIC, Inc. v Plaintiff Comm. of Creditors (In re Powerine Oil Co.), 126 BR 790, 793 (9^th Cir BAP 1991).

95.       6 ABR 189   Joseph F. Sanson Inv. Co. v 268 Ltd. (Matter of 268 Ltd.), 789 F2d 674, 675 (9^th Cir 1986).

96.       6 ABR 190   See, e.g., Reply Brief on Motion for Partial Summary Judgment Regarding Antecedent Indebtedness (GPA), at pages 10-58, Docket Entry 39, filed January 23, 1998.

97.       6 ABR 190   3 Collier on Bankruptcy, ¶ 502[3][a] LH (15^th ed 1999].

98.       6 ABR 192   Union Bank v Wolas, 112 SCt 527, 532 (1991).

99.       6 ABR 192   Senate Report (Judiciary Committee), No 95-989, at page 87, July 14, 1978 [to accompany HRS 2366] and House Report (Judiciary Committee), No 95-959, at page 372, September 8, 1977 [to accompany HR 8200].

100.       6 ABR 193   Thomas W. Garland, Inc. v Nooney Co. (In re Thomas W. Garland, Inc.), 28 BR 87 (Bankr ED Mo 1983).

101.       6 ABR 193   Iowa Premium Service Co., Inc. v First National Bank in St. Louis (In re Iowa Premium Service Co.), 695 F2d 1109 (8th Cir 1982), discussed in Part 4.1 at page 16.

102.       6 ABR 193   Child World, Inc. v Service Merchandise Co., Inc. (In re Child World, Inc.), 173 BR 473 (Bankr SDNY 1994).

103.       6 ABR 194   Id at 476-477.

104.       6 ABR 194   Brown v Morton (In re Workboats Northwest, Inc.), 201 BR 563, 567 (Bankr WD Wash 1996).

105.       6 ABR 195   11 USC § 365.

106.       6 ABR 195   Bernstein v RJL Leasing (In re White River Corp.), 799 F2d 631 (10^th Cir 1986).

107.       6 ABR 197   United States v Missouri Pac. R.R., 278 US 269, 278, 49 SCt 133, 136, 73 LEd 322 (1929); Seattle-First National Bank v Conaway, 98 F3d 1195, 1197 (9th Cir 1996).

108.       6 ABR 197   Dewsnup v Timm, 502 US 410, 112 SCt 773, 116 LEd2d 903 (1992).

109.       6 ABR 198   Armstrong v General Growth Development Corp. (In re Clothes, Inc.), 45 BR 419, 421 (Bankr D ND 1984).

110.       6 ABR 198   Sapir v Eli Haddad Corp. (In re Coco), 67 BR 365, 370-371 (Bankr SD NY 1986); Bernstein v RJL Leasing (In re White River Corp.), 799 F2d 631 (10^th Cir 1986).

111.       6 ABR 199   Upstairs Gallery, Inc. v Macklowe West Development Co., L.P. (In re Upstairs Gallery, Inc.), 167 BR 915, 918 (9th Cir BAP 1994).

112.       6 ABR 199   Fisher v New York City Dept. of Housing Preservation and Dev. (In re Pan Trading, Inc.), 125 BR 869, 875 (Bankr SDNY 1991).

113.       6 ABR 200   Nolden v Van Dyke Seed Co., Inc. (In re Gold Coast Seed Co.), 751 F2d 1118 (9^th Cir 1985); Upstairs Gallery, Inc. v Macklowe West Development Co., L.P. (In re Upstairs Gallery, Inc.), 167 BR 915, 917 (9th Cir BAP 1994); Brown v Morton (In re Workboats Northwest, Inc.), 201 BR 563, 567 (Bankr WD Wash 1996).