Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-3_07-ap-03047/USCOURTS-canb-3_07-ap-03047-0/pdf.json

Parties Involved:
E. Lynn Schoenmann
Plaintiff
Savitri Shankar
Defendant

Document Text:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 Unless otherwise indicated, all chapter, section and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and

to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, as

enacted and promulgated prior to the effective date of The

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,

Pub. L. 109-8, 119 Stat. 23.

-1-

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re ) Bankruptcy Case

 ) No. 05-33880DMLS

PETER DEVENDRA SHANKAR, )

) Chapter 7

Debtor. ) 

___________________________________) 

E. LYNN SCHOENMANN, ) Adversary Proceeding

) No. 07-3047DM

 Plaintiff, )

)

v. )

)

SAVITRI SHANKAR, )

)

 Defendant. )

___________________________________)

MEMORANDUM DECISION

Plaintiff, E. Lynn Schoenmann, trustee for Debtor’s Chapter 7

bankruptcy estate (“Plaintiff”), filed a Complaint for Avoidance

of Unauthorized Pre-Petition Transfers and Recovery of Money,

pursuant to 11 U.S.C. § 547(b),1 to avoid and recover a

preferential transfer made by Debtor, Peter Shankar (“Debtor”) to

Defendant, Savitri Shankar (“Defendant”). Defendant failed to

Signed and Filed: April 07, 2008

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

April 08, 2008

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 1 of 5 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 The following discussion constitutes the court’s findings

of fact and conclusions of law. Rule 7052 (incorporating by

reference Fed. R. Civ. P. 52(a)).

3

 See section 101(31)(A)(I). 

4

 Plaintiff demonstrated the elements set forth in sections

547(b)(1), (2), (4) and (5) existed.

11 U.S.C. § 547(b) provides: Except as provided in subsection

(c) of this section, the trustee may avoid any transfer of an

interest of the debtor in property--

-2-

provide initial disclosures, failed to respond to written

discovery requests, and did not appear at trial on March 10, 2008. 

Despite the fact that Defendant failed to file an answer or appear

at trial, the court proceeded to conduct the trial as a prove-up

hearing. For the reasons set below, the court will award judgment

to Plaintiff on her Complaint.

I. DISCUSSION 2

Plaintiff’s evidence established the following events: 

Debtor made a payment in the amount of $27,496.00 to Defendant’s

attorney on October 20, 2004, of which a total of $19,337.75 was

disbursed over three payments to Defendant, who is Debtor’s mother

and therefore an insider;3 Debtor filed his voluntary petition on

October 7, 2005; Defendant was a creditor and the payment was made

on account of an antecedent debt; and the payment enabled

Defendant to receive more than she would have received in Debtor’s

Chapter 7 case had the particular payment not been made. Thus, at

the trial’s conclusion, the court was satisfied that Plaintiff

established the elements of an avoidable preferential transfer

under section 547(b), except for Debtor’s insolvency at the time

of the transfer, pursuant to subsection (b)(3).4

 

Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 2 of 5 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 (1) to or for the benefit of a creditor;

 (2) for or on account of an antecedent debt owed by the

debtor before such transfer was made;

 (3) made while the debtor was insolvent;

 (4) made–

 ...

 (B) between ninety days and one year before the

date of the filing of the petition, if such

creditor at the time of such transfer was an

insider; and (5) that enables such creditor to receive more than such

creditor would receive if--

 (A) the case were a case under chapter 7 of this

title;

 (B)the transfer had not been made; and

 (C) such creditor received payment of such debt to

the extent provided by the provisions of this

title.

-3-

Therefore, Plaintiff was allowed to file supplemental

evidence by March 31, 2008, to prove Debtor’s insolvency at the

time of the transfer. On March 25, Plaintiff submitted a

declaration from the Debtor, along with other supporting evidence,

to prove Debtor’s insolvency. 

In her supplement, Plaintiff demonstrated Debtor’s insolvency

at two relevant points in time. First, approximately six months

prior to the transfer, Debtor’s financial condition is reflected

in his Schedules of Assets and Debts, filed as part of his divorce

proceeding, which indicate non-exempt assets of $59,081.76 and

debts of $81,180.00 - rendering Debtor insolvent at that time. 

Second, the information contained in Debtor’s bankruptcy schedules

and statement of financial affairs, filed just less than one year

after the transfer, and the statements made in his declaration,

establishes his insolvency at the time of petition. The evidence

indicates there to be no substantial changes in his assets or

liabilities between those two periods of time. 

A court may apply the principles of retrojection and

Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 3 of 5 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-4-

projection to find that a debtor was insolvent at the time of the

transfer. Gillman v. Scientific Research Prods. Inc. of Del. (In

re Mama D’Angelo, Inc.), 55 F.3d 552 (10th Cir. 1995). See also

Foley v. Briden (In re Arrowhead Gardens, Inc.), 32 B.R. 296, 301

(Bankr. D. Mass. 1983) aff’d 776 F.2d 379 (1st Cir. 1985). Those

principles permit the use of insolvency evidence on a date before 

and after the preference date as competent evidence to meet the

burden of proof on the issue of insolvency, absent any substantial

changes in the debtor’s assets or liabilities during the

intervening period. In re Mama D’Angelo, Inc., 55 F.3d at 554. 

Under the established principles of retrojection and

projection, the court concludes that Plaintiff has proven Debtor

was indeed insolvent at the time of the transfer, and thus she is

entitled to a judgment against Defendant for avoidance and

recovery of the preferential transfer in the amount of $19,337.75,

pursuant to sections 547(b) and 550(a)(1). 

II. CONCLUSION

For the reasons stated above, Plaintiff is entitled to

judgment on her Complaint for Avoidance of Unauthorized PrePetition Transfers and Recovery of Money. Debtor’s payment to

Defendant was a preferential transfer, avoidable by Plaintiff

under section 547(b), and recoverable from Defendant under section

550(a)(1). Counsel for Plaintiff shall submit a separate judgment

consistent with this Memorandum Decision. Counsel must comply

with B.L.R. 9021-1. 

*** END OF MEMORANDUM DECISION ***

Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 4 of 5 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-5-

COURT SERVICE LIST

E. Lynn Schoenmann, Trustee

800 Powell St.

San Francisco, CA 94108

Kristina Pollak, Esq.

Stromsheim and Associates

201 California St., Ste. 350

San Francisco, CA 94111

Savitri Shankar

2312 Elliott St.

San Mateo, CA 94403

K. Keith McAllister, Esq.

Law Offices of K. Keith McAllister

P.O. Box 864

Tiburon, CA 94920

United States Trustee

235 Pine St., Ste. 700

San Francisco, CA 94104

Case: 07-03047 Doc# 20 Filed: 04/07/08 Entered: 04/08/08 10:03:33 Page 5 of 5