Opinion ID: 201116
Heading Depth: 2
Heading Rank: 4

Heading: The Avoidance Action

Text: 27
28 We next consider whether Fleet would have a valid 502(h)claim upon avoidance of the gap payments. 9 See footnote 4, supra. Gray brought this avoidance action pursuant to section 549 of the Bankruptcy Code, which provides that a trustee may avoid certain post-petition transfers of property. 11 U.S.C. § 549. Except as otherwise provided in this section, to the extent that a transfer is avoided under section ... 549 ... the trustee may recover, for the benefit of the estate, the property transferred ... from — (1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or (2) any immediate or mediate transferee of such initial transferee. 11 U.S.C. § 550(a). 29 Here, the transaction at issue is Bankvest's postpetition transfer of $2,155,427 in assets or property to Fleet and Fleet's application of this sum to Bankvest's BB Warehouse Obligation. If avoidance were in order, Gray would ordinarily be entitled to recover the $2,155,427 from Fleet and to return it to Bankvest's estate. Id. See also, Max Sugarman Funeral Home, Inc. v. A.D.B. Investors, 926 F.2d 1248, 1253-58 (1st Cir.1991). 30 When grounds for avoidance are found, however, a creditor in Fleet's shoes becomes entitled to pursue whatever claim it may have had in the avoided sum against the debtor, here Bankvest, unless, of course, (as the bankruptcy court, in fact, found in Fleet's case) the creditor has somehow relinquished its claim to the avoided interest. 11 U.S.C. § 502(h) (stating, that the claim that arises from the recovery of property under section ... 550 ... shall be determined, and shall be allowed ... the same as if such claim had arisen before the date of the filing of the petition.); Ralar Distribs., Inc. v. Rubbermaid, Inc. (In re Ralar Distribs., Inc.), 4 F.3d 62, 66 n. 2 (1st Cir.1993) (stating, [f]inally, arguably no `unjust' enrichment would result were [transferor-debtor] to recover from [transferee]. If [transferee] were required to disgorge, it could file a proof of claim for the amount of the avoided transfer ... which would be entitled to a pro rata distribution from the [transferor-debtor] estate.); Verco Indus. v. Spartan Plastics (In re Verco Indus.), 704 F.2d 1134, 1138 (9th Cir.1983) (stating, [a]lthough we acknowledge that [transferor-debtor] has a valid claim for the unpaid amount of the note from Spartan, we also believe that [transferee] would have a claim against [transferor-debtor] for the loss it suffered when the transfer was set aside. [We have] stated that even where the transferee is responsible for the transfer being invalidated as fraudulent, that factor does not prevent the transferee from asserting a claim against the transferor ... [a]ccordingly, [transferee] has a claim against the estate which may be set-off against [transferor-debtor's] recovery on the note .... [transferee] concedes that [transferor-debtor] is entitled to invalidate the transfer and retain the property for the benefit of its creditors.) (citations omitted); Cohen v. Eiler (In re Cohen), 305 B.R. 886, 898 (9th Cir. BAP 2004) (stating, [n]or does recovery from a transferee under avoiding powers unfairly deprive the transferee of rights against the estate. Upon recovery, the transferee has a claim that is treated as a prepetition claim. 11 U.S.C. § 502(h). It is timely to file such a proof of claim within 30 days after the judgment becomes final.... The debt will not be discharged unless it is `provided for by the plan.') (quoting 11 U.S.C. § 1328(a)) (citations omitted); In re Dunes Hotel Associates, No. C/A 94-75715, 1997 WL 33344253, at - (Bankr.D.S.C. Sept.26, 1997) (stating, the Bankruptcy Code and Rules set out a specific procedure for the filing and allowance of a claim by the transferee of an avoided transfer ... Congress intended that such creditors should have a claim against the estate by reason of the avoidance. See 4 Collier on Bankruptcy ¶ 502.LH[10] at 502-113-15 (1997) (discussing expansion by Congress of the reach of Section 502(h) bringing it more in line with prior law); ... [i]t is clear to the Court that even upon avoidance, an event which has not yet occurred and which in fact is contrary to the present law of the case, [the creditor from whom the avoidance would recover property] would have a claim which would provide it standing to seek dismissal of the case.) (citations omitted); In re Toronto, 165 B.R. 746, 753 (Bankr.D. Conn. 1994). 31 In the instant case, the bankruptcy court held that Fleet, by reason of its transaction with ARK, had divested itself of its 502(h) claim to the avoided sums. In the court's view, that claim, although contingent at the time of the sale, was included within the assets Fleet sold to ARK along with its loan portfolio. Under this analysis, Fleet was left without any 502(h) claim to invoke after avoidance. It was thus bereft of any avenue of relief as a creditor of Bankvest. As ARK appears to have released all of its own claims against Bankvest and its representatives, the bankruptcy court's decision resulted in the gap sums becoming property of the estate. 32 The district court disagreed with the bankruptcy court's analysis. Instead, it read the ARK Contract as not having resulted in the sale to ARK of Fleet's then inchoate 502(h) claim. That claim, the court held, now entitles Fleet — as an original secured creditor of Bankvest — to prevail over Gray's avoidable right. Appellant asks us to endorse the bankruptcy court's result and to reject that of the district court. 33 To resolve the question of whether in the ARK transaction Fleet divested itself of its 502(h) claim, we must interpret Fleet's contract with ARK. In so doing, we apply New York law, following a stipulation written into the ARK Contract providing that the law of the state of New York governs its interpretation. See McCarthy v. Azure, 22 F.3d 351, 356 n. 5 (1st Cir. 1994) (concluding court should generally honor reasonable choice-of-law provision in a contract); Matter of Stoecker, 5 F.3d 1022, 1028 (7th Cir.1993) (stating, [c]ontractual stipulations concerning choice of law ordinarily are honored....). 34 According to New York law, construction of an agreement presents a question of law. Non-Linear Trading Co., Inc. v. Braddis Assocs., Inc., 243 A.D.2d 107, 675 N.Y.S.2d 5, 10 (N.Y.App.Div. 1998). Accordingly, we review the issue of contract interpretation de novo. See Sormani v. Orange County Comm. College, 240 A.D.2d 724, 659 N.Y.S.2d 507, 507 (N.Y.App.Div.1997). 35 We do so notwithstanding Fleet's contention that these proceedings are not the appropriate place to consider the meaning of a contract between ARK and Fleet, ARK not being a party, no extrinsic evidence concerning the contract having been presented, and appellant being a stranger to the contract. We reject Fleet's contention. The terms of the ARK Contract — a sophisticated, detailed legal document drawn up to guide a business transaction — seem to us sufficiently unambiguous to allow interpretation without extrinsic evidence and in ARK's absence. See Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 161 N.Y.S.2d 90, 141 N.E.2d 590, 593 (1957); see also, Ronnen v. Ajax Elec. Corp., 88 N.Y.2d 582, 648 N.Y.S.2d 422, 671 N.E.2d 534, 536-37 (1996); Lui v. Park Ridge at Terryville Ass'n, Inc., 196 A.D.2d 579, 601 N.Y.S.2d 496, 498 (N.Y.App.Div.1993) (stating, [i]t is settled that the responsibility to interpret a contract falls upon the court, `which must ascertain the intention of the parties from the language which they have employed.' The `interpretation of an unambiguous contract provision is a function for the court, and matters extrinsic to the agreement may not be considered when the intent of the parties can be gleaned from the face of the instrument.') (citations omitted). 36 The ARK Contract governed Fleet's sale to ARK of a $1.4 billion portfolio of loans, including the loans to Bankvest. It is, in effect, two contracts in one. First, it is an agreement between Fleet and JJDD LLC, an intermediary, through which Fleet sold to JJDD LLC a 100% undivided participation interest in the Participated Loans 10 ... and the Transferred Rights related thereto and ... the Nonparticipated Transferred Rights. Second, it is an agreement between JJDD LLC and ARK, through which JJDD LLC sold to ARK — in exchange for the purchase price and assumption of the Assumed Obligations — the 100% undivided participation interest in the Participated Loans, the Nonparticipated Transferred Rights 11 , and all of JJDD LLC's rights remedies, interests, powers and privileges under its agreement with Fleet. Since JJDD transferred to ARK everything transferred to it from Fleet, the contract, for present purposes, operates essentially as an agreement between Fleet and ARK. 37 The ARK Contract defines Transferred Rights as, inter alia, any and all of Fleet's and JJDD LLC's right, title and interest in the related Loans and Commitments, but excluding the Retained Interest, if any related thereto. The definition of Transferred Rights further includes, inter alia, to the extent related to the aforementioned right, title and interests, the following: 38 all claims (including `claims' as defined in Bankruptcy Code § 101(5)), suits, causes of action, and any other right of [Fleet] ... whether known or unknown, against the related [borrower under each loan transferred], the related [entity other than the borrower and lender that is obligated under each loan transferred], if any, or any of their respective Affiliates, agents, representatives, contractors, advisors, or any other Entity that in any way is based upon, arises out of or is related to any of the foregoing.... 39 The bankruptcy court concluded that Fleet's then unknown and inchoate 502(h) claim fell within the broad definition of Transferred Rights, but the district court disagreed, being of the opinion that the 502(h) claim fit within the definition of Retained Interest. 12 Fleet Nat'l Bank, 2003 WL 1700978 at -. As discussed below, we think the bankruptcy court erred in determining that Fleet's 502(h) claim fell within the Transferred Rights definition. We also question the district court's view that the 502(h) claim fell expressly within the Retained Interest clause. 13 But since Fleet, in any event, neither sold to ARK the gap payments themselves, nor, as discussed below, its 502(h) claim relating to them, we conclude that it never divested itself of the latter. That being so, Fleet is entitled, as the district court ruled, to retain and pursue its 502(h) remedy now. 40 In support of its contention that the 502(h) claim fit within the Transferred Rights definition, appellant argues that the 502(h) claim is a claim of right of Fleet, either known or unknown at the time of the agreement, against a borrower, Bankvest, of a loan transferred in the ARK Contract and, therefore, fell squarely within the definition of Transferred Rights. 41 The clause defining Transferred Rights, however, must be read in light of the ARK Contract's definitions of other terms contained within or related to that clause. Thus, while it may well be that claims known or unknown encompass future-arising claims such as a subsequent 502(h) claim, the loans transferred under the ARK Contract, as defined, did not include the portions thereof that were not outstanding under Schedule 1, nor did they include claims unrelated to Schedule 1 loans. Neither the gap payments nor claims relating to them formed part of the scheduled loans. 42 Under the ARK Contract, ARK received Fleet's right, title, and interest in, to and under the related Loans and Commitments, if any, and to the extent related thereto ... all claims (including `claims as defined in Bankruptcy Code § 101(5)), suits, causes of action, and any other right ... whether known or unknown .... (emphasis added). Loans are defined as, with respect to each Loan Agreement, the loan(s) outstanding under such Loan Agreement in the amount(s) specified in Schedule 1, and includes the note(s) (if any) evidencing such loan(s) issued under such Loan Agreement ....' (emphasis added). Loan Agreement is defined as any document identified as such on Annex A of the contract. The Bankvest loans are listed as loan agreements on Annex A. Schedule 1 incorporates the amounts of the loans as listed in Annex B. 43 Thus, in selling to ARK the related Loans and Commitments, Fleet sold only the loan(s) outstanding under such Loan Agreement in the amount(s) specified in Schedule 1, and in selling claims it did so only to the extent related thereto (i.e. related to the outstanding loans specified in Schedule 1). 44 Under this same provision in Schedule 1 is provided a definition of Commitments. Similar to Loans, Commitments are, with respect to each Loan Agreement that provides for a commitment by Fleet to make a Loan or Loans,  the principal balance of the commitments ... set forth ... on Annex B. 14 (emphasis added). 45 It is undisputed that Fleet sold to ARK the amount outstanding on the BB Warehouse Obligation after deduction of the gap payments from that amount. The amount listed in Annex B as outstanding on the BB Warehouse Obligation reflects the deduction of $2,155,427 caused by the application of the gap payments. From the definition of Transferred Rights together with the definitions of Loans and Commitments, it is apparent that Transferred Rights includes only those claims and rights under the Bankvest loan relating to the aforementioned outstanding amount, which does not include the gap payments. A fortiori, any intangible rights, like Fleet's later-established 502(h) claim relating to the gap payments, were not transferred to ARK by the Transferred Rights provision. We interpret the ARK Contract, therefore, as not resulting in a transfer by Fleet to ARK of Fleet's later-arising 502(h) claim relative to the gap payments. We conclude, therefore, that Fleet has not divested itself of the 502(h) claim. We reach the same result on this point as the district court, albeit by a slightly different path.
46 We next ask whether Fleet's 502(h) claim is secured or unsecured. The district court concluded that, by operation of section 502(h), Fleet would receive a secured claim upon avoidance — the same secured status that it had prior to the date the petition was filed here. The district court stated, [s]ection 502(h) in turn provides that a claim arising from the recovery of property under such circumstances is to be addressed `the same as if such claims had arisen before the date of filing,' i.e., prior to October 9, 2002. In re Bankvest Capital Corp., 2003 WL 1700978 at . 47 Appellant argues that section 502(h) merely provides that a claim thereunder shall be allowed as if it had arisen prepetition and does not relate to whether the claim is secured or unsecured. Section 502(h) provides as follows: 48 A claim arising from the recovery of property under section 522, 550, or 553 of this title shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. 49 Contrary to appellant, we believe the natural import of this language — especially the words, shall be determined, and shall be allowed ... the same as if such claim had arisen before the date of the filing of the petition — is that the 502(h) claim takes on the characteristics of the original claim, including, in this case, its secured status. While allowed would seem to refer mainly to claimant's right to participate in any dividend from the bankruptcy estate, determine is used variously in the Bankruptcy Code, with one usage being the determination of secured status. 11 U.S.C. § 506. We think the statute can be fairly read to imply that the secured or unsecured nature of the claim will be determined the same as if such claim had arisen before the date of the filing of the petition. Certainly, we can see no reason, nor any indication of legislative intent in § 502(h), to strip a secured creditor of its secured claim in these circumstances. Indeed, to do so would seem manifestly unfair. Infra. 50 Such case law as there is provides general support to our interpretation. In In re Verco, the Ninth Circuit stated, 502(h) serves to reinstate existing claims where property is recovered by the trustee, thereby suggesting that the 502(h) claim would have the same secured status as the transferee's prepetition claim. 704 F.2d at 1139 (9th Cir.1983). The Verco court went on to say `the modern view is that a transferee guilty of fraudulent behavior may nevertheless prove a claim against a bankrupt estate ... [a] rule to the contrary would allow the estate to recover the voidable conveyance and to retain whatever consideration it had paid therefor. Such a result would clearly be inequitable.' Id. at 1138 (quoting Misty Management Corp. v. Lockwood, 539 F.2d 1205, 1214 (9th Cir.1976)). A similarly inequitable result would occur here if Fleet's prepetition secured claim became an unsecured 502(h) claim after avoidance; for the gap payments would then presumably be distributed among other creditors, thus providing a windfall to the estate and depriving Fleet of the amount to which it was entitled. Fleet, it is true, acted improperly, but that impropriety can be remedied, and under the recent settlement will be remedied, by an appropriate sanction. See footnote 5, supra. 51 In County of Sacremento v. Hackney (In re Hackney), the bankruptcy court, applying section 502(h) to a prepetition nondishargeable claim, expressed the opinion that the language of section 502(h) was less than clear on whether the claim given a transferee was the same claim as existed earlier. 93 B.R. 213, 216 (Bankr.N.D.Cal. 1988). Nonetheless, the court concluded that the policies of bankruptcy are best satisfied if a nondischargeable claim is reinstated under 11 U.S.C. § 502(h). Id. at 218. The court noted that, [w]hile it is difficult to anticipate what policy arguments might be made in connection with other types of transfers and claims, the court can see no obvious injustice that would result from such a rule in other contexts. Id. at 219; see also, In re Moody, 131 F. 525, 530 (N.D.Iowa 1904) (stating that the trustee is not entitled to avoid transfer while retaining the consideration received). 52 Scholars likewise appear to support this interpretation. 15 See Rafael I. Pardo, On Proof of Preferential Effect, 55 Ala. L.Rev. 281, 281 (2004) ([P]referred creditor is granted the same legal rights it had before the transfer....); David Gray Carlson, Security Interests in the Crucible of Voidable Preference Law, 1995 U. Ill. L.Rev. 211, 356 (1995) (Payments received by a secured party are analytically different. Prior to bankruptcy, the `payment' extinguished the antecedent debt. Once the payment is returned, it ought to be the case that the old debt, once dead, is now revived. This is universally assumed to be true, and § 502(h) more or less supports this conclusion....); Harry M. Flechtner, Preferences, Post-petition Transfers, and Transactions Involving a Debtor's Downstream Affiliate, 5 Bankr.Dev. J. 1, 20 (1987) (To the extent a transfer satisfied a claim against the debtor, recovery of the transfer as a preference or voidable post-petition transfer restores the claim.); Michael F. Jones, Structuring the Deed in Lieu of Foreclosure Transaction, 19 Real Prop. Prob. & Tr. J. 58, 64-65 (1984) (Should the deed-in-lieu transaction ultimately be avoided under sections 544, 547 or 548, then the [lender] will be returned substantially to the status quo ante with its status being that of a holder of a prepetition claim existing at the time of the filing of the debtor's petition.). 53 The foregoing seems to us sensible. We hold that upon avoidance of the gap payments, Fleet would become entitled to a secured claim to the gap payments pursuant to section 502(h). 54 Appellant argues, however, that this is no ordinary section 502(h) case since Fleet, postpetition, sold to ARK any and all of ... [its] right, title, and interest in the Bankvest loans and all Lender Collateral and security of any kind in respect of those loans. Fleet, appellants insists, relinquished the very same property that had made it a secured creditor. Appellant notes that to be a secured creditor Fleet must be the owner of a lien, which is defined in the Code as a charge against or interest in property to secure payment of a debt or performance of an obligation. 11 U.S.C. §§ 101(37) & 101(51). 55 We see little merit to this contention. As already noted, Fleet's entitlement to be treated as a secured creditor relative to its 502(h) claim rests on section 502(h)'s proviso that its claim shall be determined and allowed the same as if such claim had arisen before the date of the filing of the petition. At such time, Fleet's claim to what were to become the gap payments was fully secured. It is Fleet's status as a secured creditor at that time, not later, that determines the nature of its present 502(h) claim. As the case law and commentators cited above indicate, the trustee's recovery of the transfer restores the original claim, with the transferee's status becoming that of the holder of a prepetition claim existing at the time of the filing of the debtor's petition. At that time, Fleet's interest in the Bankvest loans was fully secured. What happened to Fleet's security after it received the gap payments is essentially irrelevant. 56 By the time the ARK Contract was consummated, Fleet was in possession of the gap payments themselves which, under its loan arrangements with Bankvest, had, of course, been owed to it by Bankvest and, but for the bankruptcy, were properly received by it in extinction of Bankvest's debt. Fleet, having ostensibly been paid off as to the gap indebtedness by the debtor, had no further interest in the security relative to those payments. Indeed, Fleet did not purport to transfer any security relating to the gap payments themselves to ARK. As discussed earlier, the gap payments and claims pertaining thereto were not included in the transferred assets. 57 In any event, what is crucial under section 502(h) is Fleet's undoubted status as a fully secured creditor relative to the gap payments as of the time of the filing of the petition. It is this which validates Fleet's current claim. The present issue is not a claim against security existing at the time of avoidance but a claim as to the gap payments themselves. See Adams v. Hartconn Assocs., Inc. (In re Adams), 212 B.R. 703, 713-14 (Bankr.D.Mass.1997) (Secured creditor received postpetition rent payments. Subsequently, property was sold in foreclosure sale presumably extinguishing creditor's secured interest. In action to avoid those transfers, the court concluded, despite possible intervening loss of security interest, that because the transferee would simply receive the payments back upon disbursement nothing would be achieved by recovering payment to a secured creditor who in any event is entitled to the payment ahead of other creditors. The court did not discuss whether creditor had security interest at time of avoidance, thereby supporting the notion that such an inquiry is not germane.). 58 Lastly, appellant argues that even if Fleet would otherwise receive a secured claim, it is barred from litigating this issue because the confirmed Plan rendered Bankvest's assets free and clear of liens and the confirmation of a plan of reorganization is given res judicata effect. The Plan provides that, upon confirmation, all of Bankvest's assets (including causes of action and proceeds and recoveries on Causes of Action), wherever situated, vest in the debtor free and clear of all liens, claims, and encumbrances, other than those specifically reserved in the Plan. Fleet did not object to the Plan. Appellant argues that since the term proceeds and recoveries clearly encompasses the amounts received under the avoidance action, these amounts return to the estate free and clear of all liens save those specified in the plan. Accordingly, it argues, Fleet's failure to preserve the possibility of asserting a security interest after being forced to return the gap payments bars it from asserting that interest here. The district court did not address this argument, but even if it had, our review would be de novo. Jamo v. Katahdin Fed. Credit Union (In re Jamo), 283 F.3d 392, 399 (1st Cir.2002). Even assuming that appellant's construction of the Plan is correct, its argument fails. 59 The term res judicata is frequently used to refer to either claim preclusion or issue preclusion, but appellant does not specify the theory upon which it relies. It does, however, rely solely on a case in which we applied the issue preclusion standard — namely, Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973, 978 (1st Cir.1995). Accordingly, we analyze this issue under the issue preclusion standard. In order to invoke issue preclusion, appellant must demonstrate that: (1) both the [current proceedings] and the confirmation proceedings involved the same issue of law or fact; (2) the parties actually litigated the issue in the confirmation proceedings; (3) the bankruptcy court actually resolved the issue in a final and binding judgment (viz., its confirmation order); and (4) its resolution of that issue of law or fact was essential to its judgment (i.e., necessary to its holding). Id. (citing Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30 (1st Cir.1994); Piccicuto v. Dwyer, 39 F.3d 37, 40 (1st Cir.1994); Restatement (Second) of Judgments § 27 (1982)). 60 Here, the parties did not actually litigate the issue of whether the gap payments should be avoided during confirmation, let alone whether the 502(h) claim was secured or unsecured, so issue preclusion does not apply. At the time of confirmation, Fleet had already sold the balance of its outstanding Bankvest loans to ARK and was therefore not a creditor. Accordingly, ARK — rather than Fleet — participated in the negotiation of the Plan. Moreover, at that time, it was unclear that an avoidance action would be filed against Fleet; only a motion for sanctions had been filed. Indeed, at no time prior to the confirmation of the Plan did Bankvest or appellant advise Fleet that they would pursue this avoidance action. Nor could the issue of avoidance have been litigated at the confirmation proceeding. The confirmation process constitutes a contested matter under the Bankruptcy Rules; whereas an avoidance action such as this one must be commenced as a separate adversary proceeding under Federal Rule of Bankruptcy 7001. See Peltz v. World-Net, Corp. (In re USN Communications, Inc.), 280 B.R. 573, 587 (Bankr.D.Del.2002) (discussing same with preference action); Sunrise Energy Co. v. Maxus Gas Mktg. (In re Sunpacific Energy Mgmt., Inc.), 216 B.R. 776, 779 (Bankr.N.D.Tex.1997); see also Grella v. Five Cent Sav. Bank, 42 F.3d 26, 33 (1st Cir.1994). Accordingly, Fleet did not have a full and fair opportunity to litigate the issue of whether the 502(h) claim was secured or unsecured until, at the earliest, appellant successfully avoided the gap payments in an adversary proceeding. See Blonder-Tongue Lab. v. Univ. of Illinois Found., 402 U.S. 313, 328, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971) (in order to further interests of finality and judicial economy, issue preclusion doctrine requires that litigant be afforded one full and fair opportunity for judicial resolution of issue). Clearly, then, Fleet and appellant did not actually litigate this issue at confirmation. 61 Furthermore, appellant's argument is flawed at a more fundamental level. As mentioned, the trustee successfully reserved the right to bring avoidance actions in the Plan. Res judicata does not apply where a claim is expressly reserved by the litigant in the earlier bankruptcy proceeding. Browning v. Levy, 283 F.3d 761, 774 (6th Cir.2002) (citing D & K Props. Crystal Lake, 112 F.3d at 260). As res judicata does not apply to appellant's ability to bring this avoidance action, it likewise does not apply to claims that might arise from this avoidance action. 62 Accordingly, we, like the district court, conclude that Fleet's 502(h) claim would have the status of a prepetition secured claim, entitling it to full recovery of the gap proceeds were we to undertake the exercise of avoiding the gap payments. Fleet Nat'l Bank, 2003 WL 1700978 at - (stating, [c]onsequently, returning any payment to BankVest would be futile because Fleet would be returned to its status as a secured creditor, the status it was in when the gap period payments were made ... [i]f, as I hold, Fleet is not divested of the claim, avoidance under § 549 does not appear to change Fleet's priority. Its claim was merely reduced by the debtor's gap period payments, something that would have happened in any event.) (citing In re Adams, 212 B.R. at 714 (Nothing would be achieved by recovering payment to a secured creditor who in any event is entitled to the payment ahead of other creditors.)). The fact that Fleet would be entitled to receive exactly what it would be forced to return through avoidance renders avoidance pointless. 63 Affirmed.