Opinion ID: 510138
Heading Depth: 1
Heading Rank: 3

Heading: antecedent debt

Text: 18 Because the transfer element of both Sec. 547 and Sec. 548 was not satisfied, we do not reach the underlying issue of whether or not there was an antecedent debt for purposes of Sec. 547(b)(2). Under Sec. 547(b), a debtor's transfer may be avoided on account of an antecedent debt owed by the debtor before such transfer was made. 19 However, assuming arguendo, that we were to resolve this dispute, we agree with the district court and find that the down payment did not meet the antecedent debt requirement of 11 U.S.C. Sec. 547(b)(2). In reaching its conclusion, the district court found first that there was a transfer, stating that a debt is contracted when a debtor becomes legally obligated to pay. Barash v. Public Finance Corp., 658 F.2d 504, 510 (7th Cir.1981). See also In re Emerald Oil Co., 695 F.2d 833, 837 (5th Cir.1983). Further, a debt arises under a contract only after the creditor has tendered performance. In re Gold Coast Seed Co., 751 F.2d 1118, 1119 (9th Cir.1985). 20 Here, the district court properly found that Wey was not legally obligated to pay the contract until the closing date, and did not incur the debt until he forfeited the down payment by breaching the contract. Therefore, even if the trustee were to survive the fatal lack of a transfer, the lack of an antecedent debt would prevent his recovery.