Circuit split · bankruptcy law
Whether a mortgage refinancing transaction is avoidable as a preferential transfer under 11 U.S.C. § 547, or is shielded by the earmarking doctrine because the new lender's funds merely replaced the prior mortgagee
1 federal appellate case on this question, each acknowledging the disagreement in its own words.
- Chase Manhattan Mortgage Corp. v. Shapiro530 F3D 458
Sixth Circuit Court of Appeals · June 26, 2008
“Our court’s opinion in this case, in my judgment, is wrong and further establishes a split in the circuits on the preference issue in mortgage refinancing transactions.” — Acknowledges a circuit split
Empirical analysis of this case →
The provision at issue
11 U.S.C. § 547 — Preferences
“(a) In this section— (1) "inventory" means personal property leased or furnished, held for sale or lease, or to be furnished under a contract for service, raw materials, work in process, or materials used or consumed in a business, including farm products such as crops or livestock, held for sale or lease; (2) "new value" means money or money's worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the …”Read the full section →
The other side of the split
Decisions the acknowledging court(s) named as the opposing or joined side, quoted in the acknowledging opinion's own words.
- On the other side · 8th Cir.In re: Heitkamp137 F.3d 1087
“I agree with the District Court and the Eighth Circuit in In re: Heitkamp, 137 F.3d 1087 (8th Cir.1998), that we should look to the purpose, consequences, details, and common sense of the complete financing transaction at issue here and not just one little part of the transaction, i.e., the recording of the second mortgage more than 10 days after the execution of the second note and mortgage.” — Chase Manhattan Mortgage Corp. v. Shapiro, acknowledging the split
- DiscussedIn re Pitman843 F.2d 241
“The In re Pitman decision turned on the defense of contemporaneous exchange for new value, a defense that not been reused here.” — Chase Manhattan Mortgage Corp. v. Shapiro, acknowledging the split
- DiscussedIn re Lowe92 Fed.Appx. 133
“In In re Lowe, it was undisputed that the mortgage was recorded and thus perfected only seven days after the transfer took effect — safely within the 10-day grace period established by § 547(e)(2).” — Chase Manhattan Mortgage Corp. v. Shapiro, acknowledging the split
- Discussed · Supreme CourtNew York County Nat'l Bank v. Massey192 U.S. 138
- Discussed · Bankr. M.D.Tenn.Gregory v. Cmty. Credit Co. (In re Biggers)249 B.R. 873
What the split turns on
- Doctrines & tests:
- earmarking doctrine ·
- contemporaneous exchange for new value ·
- plain meaning approach
Cases are grouped by the legal question they announce a split on, classified from the court's own acknowledgment sentence. Verified acknowledgments only. Counter-side decisions are extracted from the acknowledging opinions' own text and linked only when the citation resolves in this corpus. See all circuit splits.